As Relativity Implodes, Filmmakers Are Left in Limbo

Marc Klein has spent the last four months working on a script for Relativity called “The Lost Wife,” a World War II love story set during the Holocaust. He traveled to Auschwitz and Czech Republic for research, but now the project — and the rest of his paycheck — hang in limbo, after the studio that backed it filed for bankruptcy on Thursday.

“This isn’t something I’d be able to write at a major studio,” Klein said. “It’s a story that Hollywood could tell and isn’t anymore. The one company who did is now bankrupt. That’s a bummer. They’ve been nothing but great to me.”

Beyond his own project, Klein says that Relativity’s financial meltdown will send shockwaves throughout he entertainment industry. “It’s a sad day for the movie business,” says Klein, who also worked with Relativity as the co-writer of “Mirror Mirror,” starring Julia Roberts. “It’s sad for the people who lost their jobs. And it’s sad because this was a company that was against the trend of making franchise movies. You couldn’t fault them for taking risks. All of us want to see movies that are different than ‘Iron Man’ and the DC Universe.”

As Relativity halts its movie business for now, the creative teams that worked on films for the company — projects such as the Sundance opener “The Bronze” or the Western “Jane Got a Gun” — find themselves in purgatory, unsure who will distribute their movies and on what timeline. It’s not just the dozen or so orphaned projects that are troubling many Hollywood players. It’s the realization that the industry may soon be short a buyer, now that the studio and its founder, Ryan Kavanaugh, are in financial straits.

“It’s never a good thing when the business compresses, and this is a compression,” said David Friendly, a producer of “Little Miss Sunshine.” “Whatever your disposition is on Ryan Kavanaugh, he created a sizable business. You have to admire his drive and his salesmanship.”

Despite its financial situation, Relativity is intent on releasing “Masterminds,” a comedy with Kristen Wiig and Zach Galifianakis, and “Kidnap,” a thriller with Halle Berry, and the studio anticipates that it will move forward with production on its remake of “The Crow.” All of the other finished films and the projects that are in various stages of development are on the block, sources tell Variety.

Directors, producers and writers associated with remaining Relativity titles declined to speak on the record, but sources say that the films are being aggressively shopped to new distributors. Even before Relativity filed for bankruptcy, STX Entertainment bought “Out of This World,” a science-fiction romance that the studio had in development, and “Jane Got a Gun,” starring Natalie Portman, reverted to its backers.

One title that could move quickly is “The Bronze,” the opening-night selection of this year’s Sundance Film Festival, which sold for $3 million to Relativity last January after intense bidding. Sony owns the international rights to the raunchy comedy about a masturbating, washed-up gymnast (played by Melissa Rauch), and a source says the producers on the film are taking meetings to try to reassess their options for transferring it to another U.S. distributor. But it’s unlikely that “The Bronze” will be able to make it to theaters for its planned Oct. 16 release date, as it will need time for a new P&A campaign.

Other pictures expected to draw interest are “Hunter Killer,” an action-thriller with Common and Billy Bob Thornton that is in pre-production, and “Before I Wake,” a low-budget horror film that was originally slated to hit theaters in September.

Some producers and financiers said they were concerned that Relativity’s financial failure could discourage new players from entering the movie business, but not every one believes there will be a chilling effect. “There’s never been a shortage of willing financiers attracted to the movie business,” said Friendly. “There’s a belief that it’s sexy.”

Meanwhile, others have been searching for lessons to be gleaned from Kavanaugh’s Icarus-like rise and fall. For David Weitzner, professor at USC’s School of Cinematic Arts and a former marketing president at 20th Century Fox and Universal Pictures, it’s a reminder that making movies comes down to keeping a tight eye on spending. Relativity was ultimately undone by the $320 million in debt it had accumulated and was unable to service, he notes, and of course by the lack of highly successful movies.

“I’ve seen this again and again and again,” said Weitzner. “You have to control your costs and the quality of your product. I’ve watched so many of these companies come in and burn themselves out while promising to be newer and better.”

Relativity’s pitch to investors was that using algorithms enabled it to correctly calculate how much a film would make, and to adjust its spending accordingly. Yet the movie business is not entirely rational, and Relativity fielded too many disappointing movies.

While it may have been admirable for Kavanaugh to try to take some of the risk out of moviemaking, the difference between a hit and a flop can be hard to quantify, producers and executives told Variety.

“I look around my office and see posters for ‘Dances With Wolves,’ ‘Network,’ ‘Philadelphia,’ which were all turned down at other studios,” said Mike Medavoy, a veteran producer. “They were successful not because I was smarter, but because I was luckier.”

Even with today’s news, Klein still had praise for Relativity’s creative team, including president Tucker Tooley and production president Robbie Brenner. “They know when to get involved and they know when to leave a writer alone, and a lot of executives don’t know how to do that well,” Klein said. “I always thought it was great creative experience working with the people at Relativity.”

Dave McNary contributed to this report. 

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