×
You will be redirected back to your article in seconds

Legendary Pictures, Warner Bros. Likely to Split (EXCLUSIVE)

Eight years after pairing up on a string of blockbusters, the two companies could part ways by the end of the year.

Legendary Entertainment is poised to leave the Warner Bros. fold by the end of the year and set up shop at a rival studio, unless the parties can mend their frayed relationship and come to terms on a new deal, which sources describe as “unlikely” at this juncture.

If the companies fail to extend their current co-production and distribution pact when they formally sit down to negotiate in the next month or so, it would spell the end to one of Hollywood’s most successful partnerships. The companies have been in business together for the past eight years.

Tensions over their unresolved issues come at an awkward time, just as Warner Bros. is getting ready to release three of the partners’ high-profile summer titles, “Pacific Rim,” “Man of Steel” and “Hangover Part III.” All three offerings are expected to generate a massive box office haul for both sides, which are obligated to continue co-funding and releasing pictures that are greenlit through the end of 2013. That includes the upcoming sequel “300: Rise of an Empire” and “The Seventh Son” and next year’s release “Godzilla,” which is currently in production.

Their most recent collaboration “42,” a moderately budgeted $38 million biopic, is doing solid business ($80 million to date), while their collaboration with New Line Cinema this spring, “Jack The Giant Slayer,” was a big money loser.

Positioning his company for a potential divorce with Warner Bros., Legendary chairman Thomas Tull has entertained conversations with a number of potential studio suitors, including Universal Pictures, Sony Pictures and 20th Century Fox. Legendary is obligated to give Warner the first right of negotiation.

After producing an enviable number of blockbusters that included “Batman Begins” and “The Dark Knight” and the “Hangover” series, the partnership between Legendary and Warner has grown strained. Much has changed for both since the partnership’s infancy and insiders say that Tull’s more hands-on approach to establishing Legendary’s own brand has added to the tensions with WB, particularly with Jeff Robinov, president of the motion pictures group. The Legendary relationship lost one of its stewards with 2011’s forced departure of Warner’s studio chief Alan Horn.

WB’s recently anointed chairman Kevin Tsujihara has met with Tull to try and smooths relations, but so far to little or no avail, according to sources close to the situation.

Tsujihara must balance Legendary’s desire to grow and manage its own brand with the needs of his own studio. Going forward, Tull wants even more say in the marketing and release dates of the movies in which Legendary is involved, which may not set well with WB executives.

By mid-to-late summer, Hollywood should know whether Legendary and Warner Bros. still need each other.

While sources close to the matter stress that there is no clear frontrunner amongst rival studios should the partnership with Warner end, many industry insiders are betting that Legendary and Universal wind up together. Legendary’s films could easily translate into theme park attractions at Universal Studios properties around the world and could be cross promoted across all of NBCUniversal’s media assets, including NBC. Universal will need to replace the massive hole that will be left once its outside production funding from hedge fund Elliott Management dries up at the end of the year.

Legendary and Warner became bedfellows in 2005 at a time when the Burbank studio needed money to bankroll its slate of tentpoles and Tull had a lot of it to offer.

For Tull, a Warner partnership offered him the opportunity to make the kind of films he wanted to see as a fan boy of superhero, sci-fi, fantasy fare. The first two he backed were big screen reboots of Batman and Superman.

Through next year’s “Godzilla,” Legendary and Warner have co-produced 32 films since 2005. The biggest box office successes have been “The Dark Knight,” “The Dark Knight Rises,” “300” and “Inception,” while “Jonah Hex,” “The Ant Bully” and “Sucker Punch” badly misfired.

While the relationship has been lucrative, Legendary’s success has to some extent come at Warner Bros.’ expense.

■ Legendary has the ability to cherry pick from Warner Bros.’ best movies — which stands in stark contrast to other co-financing arrangements in Hollywood where passive financiers typically invest in all or almost all of the titles on the studio’s slate without question. Sony and Universal allowed their investors to have a say in the films they chose, but the studios’ four slate deals have been mildly successful to disastrous. While a fanboy, Tull doesn’t say yes to any project offered him: He passed on “Green Lantern,” for example, which wound up being a prescient move.

■ Tull’s insistence on being an active producer instead of a passive financier has made waves at Warner. Tull tends to put his money behind films he can help shape creatively — from the way the scripts are written to the design of the marketing campaigns. He and his team also give input on release dates, the choice of consumer products and how the studio interacts with potential moviegoers via social media, irking some Warner execs at various divisions, including Robinov, who would prefer a more silent partner, according to sources.

■ Legendary and Warner have also privately complained about one side grabbing too much credit for what works when a movie hits.

■ And Legendary has capitalized on Warner Bros.’ success by establishing itself as a brand for high-profile genre fare, with strong talent relationships with directors Christopher Nolan, Todd Phillips and Guillermo del Toro. That was only elevated after Legendary purchased Chris Hardwick’s Nerdist Industries and launched a comic book division, which is still looking to gain traction.

Not helping matters, what initially brought the two companies together in 2005 may no longer be valid going forward.

Warner Bros. is no longer as dependent on Legendary coin now that the studio’s other co-financing partner Village Roadshow Pictures is flush with cash again after a $1.2 billion refinancing last year. Warner also is looking to raise additional capital, working with Bank of America and Merill Lynch for several hundred million dollars. But it’s unclear just how far along that process is, or how much Warner Bros. would really need to rely on outside financing if one of its key partners left.

Meanwhile, Legendary has begun to bankroll more of its own slate of internally developed projects through $443 million of equity it raised in December and a $700 million credit facility, secured in 2011. Legendary was the sole financier of “42” and “Seventh Son” and funded 75% of the budget of “Pacific Rim” and “Godzilla.” The company also has a slew of other homegrown projects, among them “Mass Effect,” “Warcraft,” “The Great Wall,” “Murder Mysteries” and “Hot Wheels” — all films boasting budgets of over $100 million.

In the end, Legendary could still stay put at Warner Bros. Tsujihara will presumably make further attempts to make Tull feel more welcome. And, earlier this year, Time Warner chairman and CEO Jeff Bewkes told analysts there was “problem solving going on” between the two companies.

Legendary and Warner Bros. declined to comment.

Popular on Variety

More Biz

  • Harvey Weinstein

    Weinstein Can Get a Fair Trial in Manhattan, Says D.A.

    The Manhattan District Attorney’s office argued on Friday that Harvey Weinstein can get a fair trial in Manhattan, and blamed the producer’s defense team for much of the pre-trial publicity in the case. Weinstein’s attorneys have asked an appellate court to transfer the case — which is set to begin on Sept. 9 — to [...]

  • Leonardo DiCaprio Madonna

    Leonardo DiCaprio, Madonna Call for Action on Amazon Wildfires

    As wildfires rage at an alarming rate in Brazil’s Amazon rain forest, celebrities are using their platforms to bring awareness to the deforestation’s impact and to call for action. In the past week, stars like Leonardo DiCaprio, Madonna, Cara Delevingne and Ariana Grande have taken to Instagram to express their frustration with the lack of [...]

  • 'The Durrells' TV Show

    Greece Sweetens Production Incentives as Struggling Country's Economy Rebounds

    It’s taken the better part of a decade for Greece to show signs of recovery from the crippling crisis that almost pushed it out of the Eurozone. Now, with the economy slowly on the mend, the government is doubling down on efforts to jump-start the local film industry, giving a dramatic overhaul to the incentive [...]

  • Warner Music Group Partners With Audiomack

    Warner Music Group Partners With Audiomack

    Warner Music Group announced it has entered a partnership with the music streaming and discovery service Audiomack, marking the platform’s first licensing deal with a major label. According to the announcement, the two companies will work together on content concepts and explore ways to break emerging artists, connecting music fans with rising talent before they [...]

  • Scooter Braun Congratulates Taylor Swift on

    Scooter Braun Congratulates Taylor Swift on ‘Brilliant’ Album and Campaign

    Two days after Taylor Swift fired off the latest salvo in her battle with Scooter Braun, the manager congratulated the singer on the campaign around her “brilliant” new album, “Lover,” which arrived last night. The message came after Swift said she will be re-recording songs from her first six albums, which are now owned by [...]

  • David Koch Obit

    David Koch, Libertarian Activist and Billionaire Philanthropist, Dies at 79

    David Koch, brother of Charles Koch and one of the owners of Koch Industries, the second-largest private company in the U.S., has died at 79. According to the New York Times, Charles Koch announced the news of his brother’s death in a statement. Though he did not attribute to David’s death to a particular cause, [...]

  • Beverly Hills Realtor Accused of Stealing

    Beverly Hills Realtor Accused of Stealing From Usher, Adam Lambert

    A Beverly Hills real estate agent has been arrested on charges of stealing from the homes of celebrities, including Usher, Adam Lambert and “Real Housewives” star Dorit Kemsley. Jason Emil Yaselli, 32, is accused of encouraging an accomplice, Benjamin Ackerman, to enter homes during open houses in order to steal from them. Ackerman allegedly sold [...]

More From Our Brands

Access exclusive content