The availability of new film funds at Village Roadshow could turn out to be financially fortuitous for Warner Bros.
As Legendary Entertainment focuses more on backing a slate of fanboy-friendly tentpoles it develops in-house, WB is likely to lean more heavily on longtime partner Village Roadshow as it seeks partners to co-finance the studio’s pricier pics.
Having such a partner is important given that of the 16 films that WB will release this year, the studio fully-financed just five pics, with others coming from co-financing partners or distribution deals.
WB is hardly alone in Hollywood when it comes to seeking out co-financing partners. Paramount has turned to Skydance for many of its franchises, while all the majors, besides Disney, are aggressively hunting for new coin.
But the $275 million that Village Roadshow raised in new capital this summer and the refinancing of its $1 billion debt facility will give the Australian company more flexibility to fund WB’s films. (WB also has a strong partnership with Alcon, but the production shingle fully finances the projects it brings to the studio to distrib).
Timing comes as Legendary, which has a distribution and co-financing pact with WB until 2013, has no projects lined up to co-finance with WB past next year after “Jack the Giant Slayer,” Superman reboot “Man of Steel,” “300: Rise of an Empire” and “The Hangover Part III” are released. So far, WB and Legendary have partnered on 24 films that have already been released.
While both sides are expected to continue their relationship for years to come — WB is in talks with Legendary to extend their current deal — Legendary intends to use much of its coin to back its own movies, with WB distributing those titles. Projects include “Pacific Rim,” “Godzilla,” “Seventh Son,” “Mass Effect,” “Warcraft,” “The Great Wall,” “Murder Mysteries” and “Hot Wheels,” as well as smaller baseball pic “42” that don’t have WB on board as a co-financing partner.
WB is said to have taken a minority stake in monster vs. robot mashup “Pacific Rim,” helmed by Guillermo del Toro.
Over the past year, Legendary chief Thomas Tull has gone on a roadshow, making stops at San Diego Comic-Con and on Wall Street to stress that Legendary will concentrate on producing high-profile genre fare with broad appeal — a strategy similar to the one Marvel Studios took when it started producing its own pics, beginning with “Iron Man” and “The Incredible Hulk,” in 2005.
Legendary is still very much open to co-financing pics that WB offers the company like Christopher Nolan’s “Inception” and Batman trilogy. But Legendary typically prefers to have some form of creative input in the final film, and not just write a check to producers. And it’s customary for outside investors to have the right to fund sequels whose originals they also financed.
Company recently declined to participate in the Tom Cruise vehicle “All You Need is Kill” because the project didn’t fit in with the company’s mandate.
Legendary is especially expected to remain focused on genre films as it considers launching an IPO next summer (Daily Variety, July 20), as well as other potential acquisitions after purchasing Nerdist Industries this summer.
Either way, Legendary will remain WB’s partner with the deepest pockets, having secured a $700 million credit facility last year, and closing a $128 million in new capital and $150 million in debt in April.
But Village Roadshow is ready to be a player in Hollywood again.
After helping WB co-finance “The Matrix” franchise and “I Am Legend,” Village Roadshow has been backing as few as two films a year since 2009, hamstrung by an unexpected lack of funds related to the global financial crisis. Village’s upcoming WB releases include “Gangster Squad” and “The Great Gatsby.”
Company has found success backing the “Sherlock Holmes” franchise, whose two pics have grossed over $1 billion worldwide. But the shingle has struggled with family fare like “Happy Feet Two,” “Legend of the Guardians: The Owls of Ga’Hoole” and “Cats & Dogs 2: The Revenge of Kitty Galore,” and more recently “The Lucky One” and “Dark Shadows.”
Warner Bros., Legendary and Village Roadshow declined to comment.