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Relativity’s International Distributors: ‘All We Wanted Was More Product’ (EXCLUSIVE)

Company demise would take producer of studio-level pics out of the game

For foreign distributors, Relativity Media’s bankruptcy filing is the final chapter in a story of frustration.

One of the principal pillars of Relativity’s business plan was its global network of output deals, which provided a significant portion of production financing.

Relativity International, headed by former New Line International exec Camela Galano, had upwards of 20 output deals, including multiple pacts with the regional divisions of eOne. The deals spanned the majority of overseas markets. New elements were added this past February when Munich-based Tele Muenchen Group filled in a major gap in the network by signing up for rights in Germany and Austria, and Viva Entertainment did the same on a smaller scale in the Philippines. Relativity International also renewed its deal with Tripictures and Imagem in Latin America.

International distributors are not expected to take a major hit since the Relativity pipeline had not supplied as many films as had been expected. But if the company is sold off as planned, its partners stand to lose one of the few consistent independent sources of studio-level product. For mainstream distributors hungry for a consistent supply of high-end, non-studio movies, those sources are already few and far between.

Relativity’s RED joint venture with Luc Besson’s EuropaCorp Distribution will not be put up for sale and is currently not affected by the bankruptcy, according to a EuropaCorp rep. “EuropaCorp will not be hit since RED is a platform through which we each distribute our movies independently. Under the joint venture agreement, EuropaCorp and Relativity each put $7 (million) to $8 million to distribute our respective slate,” the rep said. EuropaCorp would have the opportunity to cover its $7 million investment and take over its distribution slate.

So far, international distributors are still in the dark about the fate of upcoming releases, notably “Jane Got a Gun” (which was taken back by its backers this week) and “Masterminds.”

In the early days of Relativity, there was bullish talk of 10 or more movies a year, but in reality the output has been far more modest, with only two or three  delivered annually. Larger companies like eOne, for example, which has 17 movies from a variety of producers slated to be released in the next six months, aren’t likely to be heavily affected.

In Brazil, Imagem, which has renewed its output relationship for Latin America twice with Relativity, had hoped for several new titles to go into production this year, including “Hunter Killer” and “The Crow.”

“Relativity produces studio-level titles. Independents can only compete with the likes of Disney, Universal, Marvel’s superhero films, by having big studio-level titles. Did Relativity movies do business for us? Yes. Were they all extremely successful titles? No they were not. But they were fairly priced. And Relativity knows how to finalize a title and make it look good onscreen,” said Imagem’s Ivan Boeing.

“All we wanted from them was more titles,” Boeing continued. “Ever since the start, our expectation was that they would supply us with a significant or reasonable number of good big films. Regretfully, these expectations have not been met.”

Relativity will have supplied Imagem with 18 titles over seven years, if Zach Galifianakis comedy “Masterminds” and psychological horror title “The Disappointment Room,” slated for 2016, are included.

Spain’s Tripictures received around two to four titles a year from Relativity, said the company’s Mario Vazquez.

In Asia, Gilbert Lim, head of international sales and acquisitions at Thailand’s Sahamongkolfilm, which had an output deal with Relativity for the past two years, said, “Performance has really been so-so. Of course we hoped for some big hits.”

“We were still OK to renew it. That was due to happen in May, but it remains on the table,” said Lim. “Right now we are really just trying to understand what is going on, what is happening to the completed films and the ones behind. We have monies with them, deposits, and so we are trying to have a conversation with Camela (Galano).”

In Asia, it appears that Kavanaugh not only tried to do too much, he propelled Relativity forward at a rate quicker than his partners could keep up with. The company announced numerous Chinese deals — with Skyland, which distributed “Immortals,” “Mirror Mirror” and “Free Birds” through its relationship with Huaxia, as well as with 3C Media, China Film Promotion and Jiangsu Broadcasting Corp. — in addition to “mutual advisory roles” with Industrial Commercial Bank of China and ICBC’s investment subsidiary SeedShine Capital.

In France, Relativity hasn’t had an output deal for about four years. It previously had a pact with Stephane Berrebi’s Euro TV that ended badly, with the French company going bankrupt. Since then, Relativity has fruitlessly tried to tie the knot with another French distributor. “They haven’t had a hit since ‘Limitless,’ their movie budgets are disproportionately high, and their asking prices for France are often outrageous,” observed a French distributor.

Samuel Hadida at Metropolitan Filmexport, the French distrib of “Masterminds,” said that for now the movie is still scheduled for a November release. “’Masterminds’ was supposed to come out on Oct. 9 in the U.S. and in November in France. If the U.S. release falls apart, we’ll have to move it again or decide what we do with this film,” suggested Hadida. The French exec, whose outfit is one of France’s biggest indie distributors, said it was “worrisome to see a mini-major like Relativity in such difficulty.”

Another Relativity movie, “Jane Got a Gun,” is scheduled for a French bow on Nov. 25, but now that it’s no longer at Relativity, its fate is unclear and still needs “to be confirmed” said Stephane Celerier, head of Mars Distribution.

The loss of the films from Relativity’s pipeline would free up some of the highest-rollers in international distribution to buy star-driven titles on the open market or sign multiyear deals with any company angling to fill the breach. Some already have, in light of Relativity’s lower-than-hoped production levels. In June, Tripictures and Barcelona-based distributor DeAPlaneta announced a deal to release an undisclosed number of DreamWorks films in Spain.

The international distribution network was a crucial part of Relativity’s financing structure. Relativity International was able to raise substantial production funds by calling on the output partners to put up minimum guarantees and pre-payments for projects that were still only being developed and packaged. Relativity was also able to release movies from partner producers – including Jason Blum’s Blumhouse – through its international partners.

The output deals gave overseas distributors a guaranteed supply (with which they could in turn feed into their own output deals with local pay-TV channels, home entertainment outlets and digital distributors) of English-language content across a range of commercial genres. The films packaged name stars into salable fare, at a fraction of the cost of a Hollywood blockbuster – even those sold off internationally by major studios.

John Hopewell, Leo Barraclough, Emiliano de Pablos and Nick Vivarelli contributed to this report.

 

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