×

Fox closes $400 million co-financing pact

Deal will help fund the next two 'Avatar' films

Marking the first slate financing arrangement to close since the financial meltdown of 2008, 20th Century Fox has made a deal for just north of $400 million to help fund nearly all its films over the next five years, including the next two “Avatar” pics, multiple sources have confirmed to Variety.

Financial guru Chip Seelig brought the coin to Fox, and it’s not the first time he’s raised a sizeable amount of money for the studio, either: The pair have a relationship dating back to 2005, when Seelig arranged a $400 million slate deal as a then-partner of financial firm Dune Capital Management. Seelig left Dune about 18 months ago to start new funding ventures.

The latest deal effectively replaces the longstanding Dune structure, which has been renewed a number of times since its flagship run. Although Dune will continue to earn money from Fox films it’s helped pay for (And can re-invest that money into future studio pics), the Gotham-based firm has elected not to renew its co-financing pact, according to topper Steven Mnuchin. Dune is also in the middle of a refinancing that could put more money into Fox pics, as Variety reported in August. At that time, both sides appeared to be close to yet another extension of their relationship.

New deal also marks Fox’s first major financing under the sole chairmanship of Jim Gianopulos, who took over running the studio after co-topper Tom Rothman left his post at the end of last year. The duo ran the studio at the time of its first pact with Dune.

Magnetar Capital provided a chunk of the funding in Seelig’s latest arrangement, a source with knowledge of the transaction confirmed, and it’s understood that the Chicago-based group provided the majority of the money. As part of the arrangement, Seelig will put some of his own equity into the slate.

Seelig’s investors will participate in almost all of Fox’s films for the next five years, according to multiple sources close to the deal. Studio will typically take an 11% distribution fee, according to those briefed on the matter, and investors will usually have the option of funding between about a quarter and half of the budget per film. Deal does not include animated fare and certain smaller-budgeted pics, as is typical for Fox.

Seelig’s departure from Dune left oversight of the Fox relationship to Mnuchin, a former Goldman Sachs fund manager who also serves as chairman of One West Bank. Mnuchin and Seelig have a long history together, both from their time at Dune and at Goldman, where Seelig also worked.

Seelig is also currently holding discussions with banks about putting between $300 million and $400 million of senior debt into the deal, according to sources close to the talks. And the overall pot of money could grow, as Seelig will continue his fundraising efforts in the hopes of a longer-term partnership.

Fox has its eye on the long-term too. In Dune, the studio counted one of the longest-running modern financing partnerships of any of the majors. Dune participated in the first “Avatar,” and the relationship is widely considered to be one of the most successful co-financing pacts from the last few years. Some observers credit that to a lack of mezzanine financing in the deal’s structure, others to Dune’s access to Fox’s slate – since the fund could participate in just about any film, a juggernaut like “Avatar” and other hits more than helped make up for misfires.

As is typical for investors, Dune will earn money from its Fox library for years, although the firm has held some discussions with Fox about the studio buying out those future cash flows.

Seelig’s deal is the first slate financing arrangement to be completed in years. It also comes at a time when all the majors, with the exception of Disney, are aggressively pursuing outside cash. But capital markets have shrunk, and large-scale equity has vastly dwindled since the slate heyday of between 2005 and 2009, when every studio nabbed hundreds of millions of dollars from third parties.

While all the majors are meeting with potential investors, none appear close to a deal.

Sony and Universal are still talking to a group led by attorney John LaViolette that hopes to have around a billion dollars to divide between the studios, as Variety reported in March. But observers are mixed on whether an arrangement is likely to materialize.

Popular on Variety

More Film

  • The Great Outdoor documentary series about

    Farm to Picture: Documentary Series 'The Great Outdoor' Chronicles a Life Gone to Pot

    Cannabis cultivation in the Emerald Triangle, the area in Northern California that has long been a go-to for growers, has a starring role in a new documentary series called “The Great Outdoor.” Funded by Flow Kana, one of the state’s leading cannabis flower brands, filmed by David Zlutnick, and executive-produced by Flow Kana co-founder Flavia [...]

  • 1982 El Gouna Festival

    Egypt's El Gouna Film Festival Puts Arab Helmers at Center Stage

    The upbeat state of Arab cinema will be on the screen and in the balmy air at Egypt’s El Gouna Film Festival (Sept. 19-27), which is steadily gaining traction in its stated ambition to become a key platform and solid driver for Middle-East producers. “This year was one the best for Arab cinema,” says Intishal [...]

  • Star Skipper Paramount Animation

    Meet Star Skipper, Paramount Animation's Magical New Trademark Logo Character

    Studio logos are powerful signals to audiences.  Multiple generations of moviegoers flipping through channels or scanning streaming titles have frozen at the sight of a desk lamp hopping across the screen, because it means a Pixar movie is about to play. Likewise, when a young boy lounging inside a crescent moon casts his fishing line into [...]

  • Sybil

    Cannes Competition Movie 'Sibyl' Finds North American Home With Music Box (EXCLUSIVE)

    Music Box Films has acquired the U.S. and Canadian rights to Justine Triet’s darkly comic drama “Sibyl,” which competed at Cannes and had its North American premiere at Toronto in the Special Presentation section. Represented in international markets by mk2, the film follows the ambiguous relationship between Sibyl, a jaded psychotherapist (Virginie Efira, “An Impossible [...]

  • Kent Jones Directs 'Diane'

    Kent Jones to Exit New York Film Festival (EXCLUSIVE)

    In a surprise move, New York Film Festival’s director and selection committee chair of seven years Kent Jones will step down following this year’s 57th edition, which runs Sept. 27-Oct. 13. The departure comes as Jones’ feature filmmaking career is taking off. Issues of potential conflicts of interest have arisen as his work has moved [...]

  • Ava-Mark-Split

    Ava DuVernay, Mark Ruffalo Selected for SAG-AFTRA Foundation Honors

    Ava DuVernay and Mark Ruffalo have been selected by the SAG-AFTRA Foundation for its fourth Annual Patron of the Artists Awards. The awards will be presented on Nov. 7 at the Wallis Annenberg Center for the Performing Arts in Beverly Hills. The show benefits the nonprofit SAG-AFTRA Foundation and is not televised. Previous SAG-AFTRA Foundation Patron of the [...]

More From Our Brands

Access exclusive content