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Relativity Stumbles With ‘Disappointments Room,’ Needs a Hit to Lure Investors

If Relativity Media is going to come roaring back from its dismal recent history — including a bankruptcy, a paucity of new investment, and accusations of fraud by one lender — it’s not going to be on the strength of “The Disappointments Room.”

The first movie released in more than 18 months by Ryan Kavanaugh’s company stumbled to $1.4 million at the box office last weekend, with a paltry $901 per-screen average. So now the troubled studio must look to “Masterminds,” the Kristen Wiig/ Zach Galifianakis heist comedy due Sept. 30, for hope in fortifying its anemic bottom line.

The problem for the longer term is that Relativity must restore credibility with the creative community and attract the kind of capital investment and financing it needs to produce, distribute, and promote movies.

A person associated with an upcoming Relativity release deemed himself “completely skeptical” about the company’s ability to adequately promote the film. The source asked not to be identified to preserve what remains of his already shaky relationships with Relativity’s leadership.

“Yes, I have asked them repeatedly if they have the money to open the film,” the filmmaker said. “They swear up and down they do. They say, ‘Yes, of course we have the cash.’”

Relativity declined to discuss “The Disappointments Room,” a horror film starring Kate Beckinsale, originally slated for Nov. 18. (One insider said an even later date, Feb. 17, 2017, had also been floated.) With the completion time for the film moved up more than two months, director D.J. Caruso did not have a chance to make his edit of the movie, and some other technical fixes fell by the wayside, according to one individual close to Relativity. Caruso declined to comment.

Studio Stats
Global box office from Relativity’s last three films:
$38m “The Lazarus Effect” (2015)
$22m “Black or White” (2015)
$15m “Beyond the Lights” (2014)
Source: Boxoffice mojo

The company also declined to discuss how it promoted “The Disappointments Room.” Because it chose the traditionally low-volume post-Labor Day opening, Relativity likely had to show exhibitors littleevidence of big promotional muscle to persuade them to open screens for the haunted-attic pic. (Kavanaugh had earlier suggested on Twitter that the film would be given “limited theatrical release, focusing on VOD,” though that comment was quickly deleted. The film was said to have opened on 1,500 screens.)

It appeared that awareness about “Disappointments” was not high. The ad-tracking service iSpot.tv estimated a total spend of $4.5 million on 1,763 television spots as of Sept. 9. That went up against Warner Bros.’ $27.3 million, 4,261-spot push for “Sully,” which won the weekend with a box office take of $35.5 million.

“Being in the film distribution business today is a massive, massive, massive cash suck, to compete on a level with well-funded public companies,” said the individual close to Relativity. “It’s not just $100 million or $200 million, but a half billion or billion dollars you need to do it right for an extended period of time, so you can stay in the game long enough to find the hits you need to make money.”

In another measure of Relativity’s financial distress, the company in late June had to seek an extension from its lenders for a $30 million payment, sources said. Kavanaugh issued a statement at the time insisting that his company had reached an agreement with “a large strategic partner involving new equity.” The partner was never identified.

Despite skepticism from the financial and entertainment communities, Kavanaugh’s public stance has been that his studio has a bright future. Relativity last week announced that it had started a new indie label, R2 Entertainment, to field platform releases to be made for $15 million or less. The studio also floated the idea that it would begin production in January on a remake of “The Crow.”

Kavanaugh’s studio now has a creative leader in Dana Brunetti, a proven producer who has long teamed with actor Kevin Spacey.

“I know there’s skepticism, but we are going to make movies,” said one Relativity insider, who also asked not to be named. “That’s why I’m here. That’s why we’re all here. We’re going to surprise people.”

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