×
You will be redirected back to your article in seconds

Luc Besson, EuropaCorp Face Day of Reckoning With Shareholders Over Flop of ‘Valerian’

EuropaCorp has weathered storms before, notably after the flop of Luc Besson’s pricey “Arthur” animated franchise in 2010. But the studio, with record losses of $135 million during the last financial year, is now facing a crisis of much larger scope, as the numbers for sci-fi epic “Valerian and the City of a Thousand Planets” trickle in.

The failure of “Valerian” to live up to expectations has forced Besson’s 18-year-old company, whose stock has dropped by more than 40% since July, to rethink its strategy and scale back its impressive ambitions. As executives gird for a Sept. 27 shareholders meeting, EuropaCorp is now focused on slashing overhead and shrinking its lineup of films, sources close to the company say.

After posting a $44 million loss in 2010, EuropaCorp began concentrating on building a slate of English-language movies to raise its global profile and seek bigger profits. The strategy worked with the three action-packed pics in the “Taken” franchise and Besson’s “Lucy,” each budgeted below $50 million. “Lucy” grossed $463 million, and the “Taken” films minted a total of $929 million. But the company hit a rough patch when it stepped into English-language films of diverse genres — “The Circle,” “Shut In,” “Nine Lives,” “Miss Sloane” — to feed the pipeline of its U.S. distribution venture, RED, which it launched with Relativity Media in 2014.

In the wake of “Valerian,” which cost $180 million to produce, EuropaCorp is expected to cut its English-language slate to two to three movies per year, compared with five or six previously, with modest budgets from $25 million to $35 million apiece, according to a source close to the company. The studio will continue to make two to three French films per year and will likely ramp up its TV business in the U.S., which has been profitable with franchise-based series such as “Taken.”

As for reducing overhead, EuropaCorp has already laid off deputy CEO Edouard de Vesinne. Although he is not being blamed for “Valerian’s” lackluster performance, pulling him from the payroll will save EuropaCorp nearly half a million dollars in salary. De Vesinne, who was appointed in 2016 and ran the company’s French operations, played a key role in familiarizing CEO Marc Shmuger with the local industry.

At a recent meeting inside EuropaCorp’s Paris headquarters, where one source called the atmosphere “chaotic,” staff was told there would be no mass layoffs. Asked last week whether job losses were imminent, a company spokesperson said merely that there was no layoff plan in place “as of today.” He acknowledged some “voluntary departures which had been planned for a while,” including the deputy head of sales, and “short-term contracts that were not being renewed.” Even Shmuger, who receives a salary of $2.1 million and a variable bonus of $428,654, is on a six-month renewable contract.

EuropaCorp limited its exposure on“Valerian” to less than $15 million by raising roughly 90% of the film’s budget via presales and equity investment. But at the same time, the studio was desperate for the film to perform well in order to build a new franchise and restore the company’s financial health.

Neither of those goals is likely to be achieved. In fact, although EuropaCorp mitigated its financial risks on “Valerian,” it could still lose about $60 million, the bulk of that from P&A in the U.S., where the movie’s failure to ignite sank its overall fortunes. As of Sept. 18, “Valerian” has grossed $221.5 million worldwide. In China, it has been moderately successful, grossing more than $60 million in just over 10 days. Those earnings will go mostly to Shanghai-based Fundamental Films, which invested $50 million in the movie, rather than EuropaCorp.

As EuropaCorp’s second-largest shareholder, with a 27.9% stake, Fundamental injected $67 million into the company a year ago and is being discussed as a white knight that could buy out the company or plow more equity into it. But China’s crackdown on overseas entertainment deals could make that idea a nonstarter. Fundamental has declined to comment.

Another potential bidder is Mediawan, the French buyout company launched by Xavier Niel, Matthieu Pigasse and Pierre-Antoine Capton, with an investment capacity estimated at €1.5 billion ($1.79 billion). A move by Mediawan to buy EuropaCorp last spring was rebuffed. But things might look very different now, post-“Valerian.”

“One must learn to be patient,” Pigasse told Vanity Fair.

More Biz

  • Daily Show Viacom

    DirecTV, Viacom Avert Blackout After Marathon Negotiation

    DirecTV and Viacom have agreed on a carriage renewal pact covering a raft of Viacom’s cable channels after a marathon negotiation over the weekend. In a joint statement early Monday, the companies said: “We are pleased to announce a renewed Viacom-AT&T contract that includes continued carriage of Viacom services across multiple AT&T platforms and products. [...]

  • Discovery CEO David Zaslav Sees 2018

    Discovery CEO David Zaslav Sees 2018 Compensation Soar to $129.4 Million

    Discovery Inc. president-CEO David Zaslav is once again making headlines for an enormous compensation package. Zaslav’s 2018 compensation soared to $129.44 million in 2018, fueled by stock options and grants awarded as the longtime Discovery chief signed a new employment contract last July that takes him through 2023 at the cable programming group. Zaslav received [...]

  • Jonathan Lamy RIAA

    Jonathan Lamy Stepping Down From RIAA

    Jonathan Lamy, the Recording Industry Association of America’s longtime executive VP of communications and marketing, is stepping down from his post after 17 years, he announced today. As he put it in an email to Variety, “I started back in 2002, which means it’s been 17+ years, four different RIAA CEOs, three format changes and [...]

  • Fox Layoffs

    Disney-21st Fox Layoffs: TV Divisions Brace for Deep Cuts

    A second day of layoffs has begun on the Fox lot in the wake of Disney completing its acquisition of 21st Century Fox on Wednesday. Longtime 20th Century Fox Television Distribution president Mark Kaner is among the senior executives who were formally notified with severance details on Friday morning. 21st Century Fox’s international TV sales [...]

  • anthony pellicano

    Hollywood Fixer Anthony Pellicano Released From Federal Prison

    Anthony Pellicano, the Hollywood private eye whose wiretapping case riveted the industry a decade ago, was released from a federal prison on Friday, a prison spokeswoman confirmed. Pellicano was sentenced in 2008 to 15 years, following his conviction on 78 charges of wiretapping, racketeering, conspiracy and wire fraud. He had been in custody since 2003, [...]

  • This image taken from the Twitter

    HBO’s Reaction to Trump’s ‘Game of Thrones’ Campaign

    Everyone wants a piece of the “Game of Thrones” lemon cake. From Bud Light to Red Bull the world of Westeros is open to a lot of brand partnerships, unless you’re using that iconic typeface to push a political agenda. In November of 2018 President Donald Trump unveiled a “Thrones” inspired poster with the words [...]

  • Leaving Neverland HBO

    'Leaving Neverland' Lawsuit Proves to Be a Judicial Hot Potato

    The Michael Jackson estate sued HBO last month for airing the documentary “Leaving Neverland,” which accuses the late King of Pop of serial child sexual abuse. Since then, the case has had a difficult time finding a judge to handle it. Three federal judges have recused themselves in the last week, citing potential financial conflicts [...]

More From Our Brands

Access exclusive content