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With ‘Valerian’ Looming, EuropaCorp Posts Record Losses of $135 Million

PARIS – Luc Besson’s EuropaCorp has posted record losses of 119.9 million euros ($135 million) during the fiscal year ending March 31, driven by a series of English-language flops and its costly U.S. distribution operations.

The 17-year-old film studio released its financial results Wednesday, just weeks before the opening of its enormously expensive sci-fi thriller “Valerian and the City of a Thousand Planets,” which EuropaCorp desperately needs to be a hit.

The company said that this year’s losses – more than triple the $44-million loss it posted in 2010 – were due to the under-performance of its U.S. slate. The studio cited the poor showing of “9 Lives,” “Shut In,” “Miss Sloane” and “The Circle.”

The banner distributed those films in the U.S. via RED, its joint venture with Relativity Media, and said it spent more than 100 million euros in P&A costs that were not fully recouped.

Although EuropaCorp didn’t mention Relativity in its financial release, the company acknowledged that it had made “dramatic changes” to its U.S. distribution strategy. In light of Relativity’s bankruptcy woes, EuropaCorp opted to find another partner in the U.S. and signed a multi-year deal with STX Motion Pictures Group, under which STX will handle the theatrical marketing and distribution services for upcoming EuropaCorp releases, most notably “Valerian.”

EuropaCorp said losses have already been partly covered by the 60 million euros ($67 million) brought to the company by FF Motion Invest and the sale of its multiplexes for 20 million euros ($22.7 million) and music library for 14 million euros ($16.3 million).

EuropaCorp will now be focusing on action and science fiction films, which the company has a track record of delivering. Some of the outfit’s most successful films are “Taken” (the trilogy), “The Fifth Element” and “Lucy.”

CEO Marc Shmuger told Variety recently that, “in the past year or so, we recognized that EuropaCorp strayed too far from its core strength, which is producing slick genre films for the right price that travel successfully around the globe.”

A return to profitability will depend in large part on the performance of “Valerian,” even if the company has limited its risk by raising roughly 90% of the film’s budget through pre-sales and equity investment. With an estimated budget of $180 million, “Valerian” is considered to be the most expensive independently financed movie ever made.

A EuropaCorp spokesperson told Variety that the company has limited its exposure to less than $20 million on “Valerian.” Nevertheless, the spokesperson said that “EuropaCorp is looking towards a significant performance from ‘Valerian’ in the hopes of creating the company’s newest franchise.”

Pavel Govciyan, an analyst at Natixis, said “Valerian” would have to gross about $400 million worldwide to help EuropaCorp get back in the black. Govciyan added that he was optimistic “Valerian” could reach that target.

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