When Christophe Lambert was tapped CEO of Luc Besson’s EuropaCorp in 2010, he got a lukewarm welcome from the local film industry. Indeed, he was best-known as a top-notch advertising exec with ties to France’s then-president Nicolas Sarkozy. Since then, Lambert has proven he could walk the talk, leading EuropaCorp to a record €19.6 million ($25.5 million) net profit in operating profit margin for 2012-13. Under his watch, EuropaCorp opened its Cite du Cinema studio and backlot outside Paris, pacted with Relativity Media, signed strategic output deals in key international markets and has been diversifying into TV production and theatrical exhibition. Lambert has now launched a decisive phase of the shingle’s expansion, reaching a $130 million deal to create Relativity EuropaCorp Distribution (RED), a U.S. distribution company jointly owned with Ryan Kavanaugh’s Relativity Media. A source familiar with the deal said that as part of the deal, Relativity is able to buy out EuropaCorp in full with no residual at any time over the next few years.
Lambert said the outfit will significantly ramp up its investments during its next financial year, due to start in June. EuropaCorp will be producing mostly English-language movies, and reducing by more than half its slate of French-language pics.
Variety: Why did you choose Relativity for a joint venture?
Lambert: The deal made sense for us and for Relativity because we’re complementary. At EuropaCorp, we’re very limited when it comes to distribution options in the U.S., and we’re in overcapacity when it comes to the number of films we can produce. Relativity is in the opposite situation. They have a great distribution capacity, a know-how in marketing, deals in place with Netflix for the SVOD and Fox Home Entertainment for DVD and Blu-ray.
We previously collaborated with Tucker Tooley on three films (“Malavita,” “Three Days to Kill” and “Brick Mansion”) and we got along very well.
Variety: You made that deal for $130 million (anticipated to be paid over a six-year timeframe for a 50-percent stake in the joint venture). Seems like a lot of money.
Lambert: No, it’s not. To acquire a 50% stake in a U.S. joint venture that right away is capable of releasing 15 movies a year in the U.S. is highly valuable. Through this company, we benefit from agreements with Fox Home Entertainment and Netflix, and various distribution channels. That establishes that company’s value at $260 million and it ranks in the top eight distribution companies in the U.S.
Variety: How is this joint venture structured?
Lambert: RED will distribute films from EuropaCorp and Relativity; but EuropaCorp USA (the French company’s L.A.-based arm) and Relativity Media will retain revenues from theatrical, video and TV, which will flow directly back to each of us. Relativity’s marketing and distribution employees will service the joint venture. The agreement also gives EuropaCorp and Relativity a first-look option (on each others’ films) and allows us to invest up 50% in equity in each others’ films.
Variety: Who will pay the P&A to release your films via RED?
Lambert: We’ll bring in the P&A on our films, and Relativity will bring the P&A on theirs.
Variety: The P&A is the U.S. in extremely high, how are you going to find the resources?
Lambert: We’re in advanced discussions with U.S. banks and P&A funds. We’re not worried about the P&A;the hardest thing is having the distribution capacity and the movies. When you have both, raising the money isn’t a problem. Plus, as a distributor, we’ll also be able to access ultimate revenues from our films. As a result, we’ll raise the financing based on these ultimates’ estimates and pay back our production loans.
Variety: What are the first films that will be released in the U.S. via RED?
Lambert: Louis Leterrier’s “Sea at War,” the “Transporter” trilogy reboot and “DNA” (to be directed by Simon West) will be the released in the U.S. by RED. We’re also considering releasing Bertrand Bonello’s “Saint Laurent” in the U.S. since it’s got a strong international potential.
But “Lucy” and “Taken 3” will be released by Universal and Fox, respectively, since we signed those deals prior to the launch of RED. And Brian Kennedy is representing U.S. rights to “The Homesman” by Tommy Lee Jones.
Variety: So you’ll consider using RED to distribute your French-language movies in the U.S.?
Lambert: Yes, but it won’t be often. Very few French-language films can appeal to mainstream U.S. audiences. In any case, we’ll do a platform release on these movies: we’ll distribute them on something like five screens and then gradually increase the number of playdates if the box office catches on.
Variety: Why does it make more sense financially to release your movies directly in the U.S. and put down the P&A rather than signing with a U.S. major like Universal or Fox, which can release your films in multiple territories?
Lambert: It makes sense because we have output deals in nearly every major market (to name a few: Fundamental in China, Universum in Germany, Scanbox in Scandinavia). Our partners want to have access to our international films since they rarely have access to U.S. movies, which are often handled by U.S. majors’ foreign arms. When we make a movie like “Lucy” with Universal it frustrates our partners considerably.
In terms of minimum guarantees, we financed “Malavita,” “Three Days to Kill” and “Colombiana” with a U.S. distributor that didn’t have other territories so we’ll follow the same path. Lionsgate and Summit also work that way.
Variety: Are you planning to increase your volume of English-language productions?
Lambert: Yes, the whole idea behind this deal is to have the possibility to produce around eight English-language films per year. We have the projects, ideas and resources but up until now we didn’t have the capacity to distribute eight films per year in the U.S. We were limited because we could hardly sell more than three films a year to a U.S. distributor. The studios have dramatically reduced their slates for the past five or six years and their appetite for third-party movies is fading. So we’ll be able to grow from three to eight English-language movies produced per year. We currently have 22 projects in development.
Variety: Since you’ll be producing many more English-language movies, are you looking to expand beyond actioners and thrillers? How well are you connected with U.S. independent talent and producers in order to generate new projects?
Lambert: We’re looking to broaden our scope. We’ll be doing melodramas and dramedies, as well as continue making fantasies, sci-fi, thrillers and action movies. We already have a great melodrama that is ready (Lambert would not be drawn on the title). One thing is certain, however, is that we’ll never make another animated feature.
As far as our industry connections in the U.S., Lisa Ellzey, who speaheads our L.A. office, has been introducing us to some great talent and screenwriters but we still need to establish ties with independent producers. It will be our next challenge.
Being a distributor will give us extra leverage to negotiate with agents and sign talent. They’ll know we’re not using their clients’ names to lock down a distribution deal.
Variety: So what are your plans with French-language film productions?
Lambert: We’re going to considerably cut down the number of French-language movies we produce. We’ll go from eight or nine a year to three or four films. The French market is extremely difficult and while it takes as much time and energy to produce a film in French or English, the commercial potential isn’t comparable. So it doesn’t make financial sense to continue producing French-language films. Companies like Pathe have a long tradition for producing popular French comedies, but we don’t; on the other hand, it seems we’re the only ones who can produce movies like “Taken” so that’s where we’re headed.
Variety: So it’s a sad news for French producers, isn’t it?
Lambert: We’re open to work with French producers who want to make English-language movies and we’ll continue working with producers like Alain Attal (Les Films du Tresor), Mandarin Cinema or LGM, although we’re not interested in signing output deals. Some recent English-language films like “Blood Ties” under-performed but I believe that in five years or so, more and more French producers will be able to produce successful movies in English.