Skeptics of Relativity Media's Ryan Kavanaugh will have to admit that the aggressively ambitious 35-year-old Hollywood upstart is serious about turning his financing operation (he puts up the money for three-quarters of the movies made by Sony and Universal) into a real studio. After six years, the red-haired Wall street operator, who lost his venture capital firm during the 2001 market bust, has earned mogul status with the purchase from Starz of the distribution and marketing staff of Overture Films, which had been on the sales block and recently lost its top two execs, Chris McGurk and Danny Rosett.
Overture marketing chief Peter Adee and distribution head Kyle Davies will move their teams--about 45 people, two-thirds of Overture's staff-- over to Relativity to start up the company's theatrical marketing and distribution divisions. They will release future Relativity films that are not already locked into other release plans. Relativity is pacting with Overture Films to continue planned limited openings for Jack Goes Boating and Stone and a broader campaign for horror remake Let Me In, which Overture is promoting in Comic-Con this weekend.
“With our increased focus on original content, it no longer makes strategic sense for Starz to make theatrical motion pictures,” stated Starz CEO Chris Albrecht. “However we’re pleased to have found a great opportunity for the majority of the company’s employees, including the talented distribution and marketing teams.”
With backing from New York's Elliott Associates, a hedge fund sitting on $13 billion in assets, Kavanaugh is in the process of setting up a studio operation. Relativity paid a reported $150 million to buy the Rogue genre label from frequent producing partner NBC Universal (which releases some of their films, including Sundance pick-up Catfish). Relativity also struck a deal with Netflix to stream new movies in the pay-TV window, making them available months after their theatrical release, just after the DVD window. Relativity controls rights to 14 upcoming films; each year the company co-finances some twenty films and principally finances ten.
Relativity Media has built on its foundation of financing and producing films (some 200 through 2014) by adding music, sports and television divisions (including RelativityREAL) and the social network iamrogue.com. Recent films that boast some Relativity DNA are Dear John, Brothers, The Wolfman, It’s Complicated, Zombieland, Couples Retreat, The Bounty Hunter, Get Him to the Greek, Robin Hood and Grown Ups. Still to come are The Fighter, Despicable Me, Charlie St. Cloud, Salt, Nanny McPhee 2, The Social Network and 3D films from James Cameron (Sanctum) and Wes Craven (My Soul To Take).
This deal does does not involve Starz Media’s home video unit Anchor Bay Entertainment.
The question remains, however: is Relativity built on a house of cards, or does it have real potential? While Kavanaugh's back-room numbers crunchers can lay bets on which movies are the least risky to invest in--much as Village Roadshow or Legendary does--they still pick the occasional sure-thing like Bruce Almighty and lose. Adding production, distribution and marketing to the mix has flattened many Hollywood interlopers in the past. Kavanaugh still has much to prove.