Helios and Matheson Analytics, the parent company of MoviePass, has acquired the exclusive option to buy Emmett Furla Oasis Films, the producers of “Lone Survivor” and “End of Watch,” Variety has learned.
If completed, the deal will enable the company to buy the entire film library and current production slate of EFO Films. Helios and Matheson plans to use the library and the filmmaking expertise of EFO Films to launch its own production company, MoviePass Films. Randall Emmett and George Furla will serve as co-CEO’s of the new venture.
The deal comes as MoviePass, best known for allowing customers to see a movie a day for less than $10 a month, is facing questions about its long-term future and current capitalization. Last week, Helios and Matheson’s stock fell to 40 cents-a-share, its lowest closing price, amid investor alarm about a cash shortage. In October, Helios and Matheson’s stock had been trading at $38.86 a share. The value has declined rapidly since a recent filing with the Securities and Exchange Commission revealed the company had $15.5 million in available cash at the end of April, plus $27.9 million on deposit with merchants. Its monthly expenses totaled $21.7 million. Helios’ stock did rebound on Monday, rising 15% after it was revealed that Citadel Securities, a leading market maker, had taken a 5.4% stake in the company.
In an interview with Variety, Helios and Matheson CEO Ted Farnsworth said the deal to acquire EFO Films is a sign that MoviePass remains viable.
“This signals our long-term commitment to the movie business,” he said. “We’re here for the long haul.”
In an earlier interview at Cannes, Farnsworth hit back at critics, claiming that the company had roughly $300 million available from an equity line of credit. The deal for EFO Films is a combination of cash and stock. The financial specifics of the pact were not disclosed.
Even before the pact to buy EFO Films’ library, MoviePass has been inching into the content business. It is releasing “American Animals” on June 1 in collaboration with the Orchard, and it will release “Gotti,” a crime film with John Travolta, on June 15. EFO Films produced the picture, which is how Farnsworth became acquainted with Emmett and Furla.
Helios will own 51% of MoviePass Films, while EFO Films will own the remaining 49% of the company. The partners say that MoviePass Films make new movies both for theatrical release and for other forms of distribution, such as direct-to-streaming services.
“Since we began disrupting the movie industry with our unprecedented low cost movie theater subscription service, MoviePass, we have envisioned owning and developing our own content and using the power of our several million subscribers to bolster the success of our films,” Lowe said in a statement. “I believe this partnership with Emmett Furla Oasis Films will accelerate those efforts.”
Stuart Benson, CFO of Helios, will serve as the CFO of MoviePass Films; while Farnsworth will be MoviePass Films’ chairman of the board. MoviePass CEO Mitch Lowe will hold a seat on the board.
The EFO Films library also includes “Broken City,” “Rambo,” and “The Frozen Ground,” as well as films in development such as “Escape Plan 2” and “Asteroids,” an adaptation of the Atari video game.
MoviePass has been a controversial figure in the industry. The company pays movie theaters for its tickets and subsidizes its customers. However, exhibitors such as AMC have faulted the company for introducing an unsustainable pricing model into the business. Tickets in cities such as New York City or Los Angeles are in excess of $10, or cost more than a monthly MoviePass membership. They believe that MoviePass won’t be able to afford to keep subsidizing movie-going, leaving customers feeling aggrieved.
MoviePass has countered by saying that it is diversifying its business beyond subscriptions. It sells ads and plans to use the data from its customers to target moviegoers in ways that make money. Presumably, producing movies is part of its diversification.
Emmett said that his time working on “Gotti” had made him a MoviePass convert, praising the service for being able to drive its user base of more than 2 million customers to buy tickets.
“To do a deal with Helios and MoviePass is epic for us,” said Emmett. “The MoviePass subscription service has totally disrupted the movie industry, for the better.”