By Anne Thompson and Beth Hanna | Indiewire October 2, 2012 at 2:40PM
Following journalist Connie Bruck's Ron Burkle profile published Monday in The New Yorker entitled "Cashier du Cinema" --which depicts Relativity Media CEO Ryan Kavanaugh as an incompetent businessman (which Hollywood insiders have long suspected) who has lost control of his company to owner Burkle--Kavanaugh and his lawyer are protesting, calling the piece "false and malicious."
Bruck's profile of Kavanaugh's business partner cites a "popular Hollywood theory" that Burkle will soon replace the brash, larger-than-life Kavanaugh with another Hollywood high-roller, Harvey Weinstein. Relativity and lawyer Carol Genis charge that the New Yorker article was "obviously designed to inflict serious harm upon" Relativity and Kavanaugh.
Kavanaugh emphatically denies the Weinstein rumor, telling THR:
"Not only does Ron support us and support our business plan, this type of change wouldn't be possible without the entire board -- me included -- supporting it. I'm too difficult to work with, anyway; Harvey wouldn't want to be my partner.”
Bruck reports that Burkle has an agreement with Weinstein that allows him to buy into as much as 50% of any TWC movie. “We do everything on a handshake," Burkle tells Bruck. "The first movie we did together, '[Our] Idiot Brother,' Harvey thought he spent more on P&A than he should have, and he called me and said, ‘I’m not gonna take a distribution fee because I don’t think I did you right.’ So, for whatever anybody’s ever told me about how tough Harvey is, he’s been ridiculously fair with me...Everything I’ve done with Harvey has been profitable -- everything.”
THR posts a letter from Burkle, who is trying to mend fences with Kavanaugh:
It was clear from the start that Connie Bruck wanted to write about you. I told her we won't comment about any investments. We specifically told her that you have a private company and anything she wants to know she should ask you. The only color I gave her was that I like you, but it was a business deal.
The article is full of mistakes and misdirection...I have a five car garage not a 40 car garage....my worst year IRR was 8% and my best was 60%...not 2%...the mistakes and misquotes are endless.
Obviously you run your company, anyone who says otherwise has no idea about our governance or our relationship. Just as false is the statement that we got our equity from you for free.
A long time ago a friend told me articles like this are a successful person's tax....it's just part of life at our level.
I know it can be damaging to people who don't know you or the facts. Let me know if there is anything you need me to do.
UPDATE: Kavanaugh and Weinstein are linked in more ways than one today, with THR breaking the news that Kavanaugh is also a victim of blackmailer and aspiring actor Vivek Shah, who is being charged with extorting various business execs with highly menacing communications. Weinstein previously received a blackmail letter asking for millions of dollars, or risk the killing of a family member. Kavanaugh received a similar threat on August 9, reportedly asking for $11.3 million, three times what was demanded of Weinstein, or to "expect at least one person dead in the next year." Scarier still, Kavanaugh and Shah apparently know each other, as a photo from an October 11 awards banquet shows the two smiling for the camera, arms around each other.