Relativity Media

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Relativity Media, LLC
TypeLimited liability company
Industry
GenreIndependent films
FoundedMay 18, 2004; 17 years ago (2004-05-18)
FoundersLynwood Spinks
Ryan Kavanaugh
Headquarters
Beverly Hills, California
,
U.S.
Key people
Products
  • Motion pictures
  • Music
  • Media
  • Television
  • Sports
Services
  • Acquisitioning
  • Film development
  • Film production
  • Film distribution
Number of employees
Approximately 350 (2013)[2]
ParentUltraV Holdings
Divisions
  • Studios
  • Home Entertainment
  • Television
  • International
  • Sports[3]
  • Digital Studios
  • Music
Subsidiaries
  • Madvine
  • Trigger Street Productions
  • R2 Entertainment
  • RED (Relativity EuropaCorp Distribution) (joint venture with EuropaCorp)
Websiterelativitymedia.com

Relativity Media is an American media company headquartered in Beverly Hills, California, founded in 2004 by Lynwood Spinks and Ryan Kavanaugh. The studio was the third largest mini-major globally until bankruptcy on July 30, 2015. Its full-scale film studio acquires, develops, produces and distributes films. The company's partners and financial institutions have invested $20 billion as of 2012 in entertainment investments with partners such as Citibank, Merrill Lynch, Deutsche Bank and others. Relativity Media also works in fashion, sports, digital and music.[4]

On July 30, 2015, the company filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Southern District of New York after lawsuits and missing loan payments.[5][6][7][8] As a result, the company began selling off previously acquired films including Suffragette, Jane Got a Gun, The Bronze, Love the Coopers, The Space Between Us, The Foreigner, Solace, Collide, Kidnap, Before I Wake, Animal Crackers, Shot Caller and The Secret Scripture. Suffragette was sold to Focus Features and as a result Ryan dropped out of producing the film due to financial struggles with his company; Jane Got a Gun was sold to TWC, The Bronze was sold to both Sony Pictures Classics and Stage 6 Films, Love the Coopers was sold to CBS Films, The Space Between Us and The Foreigner were both sold to STX Entertainment, Solace was sold to Lionsgate Premiere, Collide was sold to Open Road Films, Kidnap was sold to Aviron Pictures, Before I Wake and Animal Crackers were both sold to Netflix, Shot Caller was sold to Saban Films and The Secret Scripture was sold to Vertical Entertainment and transferred its distribution rights of EuropaCorp to STX Entertainment in 2017. The company emerged from the bankruptcy in March 2016,[9] but in May 2018 it filed for bankruptcy once again.[10] The studio remains open for business and is now being operated by its new parent company UltraV Holdings.[1]

History[]

The studio was founded by Ryan Kavanaugh and Lynwood Spinks in 2004 as a middleman company arranging multi-film slate deals with studios then arranging financial support through banks. Relativity Media would receive film equity, producer's credit and a fee. Initially, Stark Investments, a Wisconsin-based hedge fund, funded the company's single-picture business. By 2007, these investors stopped making movie-finance deals. Elliott Management, a $16 billion New York–based hedge fund run by Paul Singer, then took a minority share of the company plus access to around $1 billion in capital and a revolving credit line.[11]

On January 4, 2009, the studio acquired the genre label Rogue from Universal, for $150 million.[12] Relativity oversaw Rogue's 2009 film offerings, which consisted of Last House On The Left, The Unborn, Come Out Fighting, and My Soul to Take, as well as more than 30 projects in development. The deal also included the Rogue film library, featuring such films as Assault On Precinct 13 and The Strangers.[13][14] On the same year, the Studio made a deal with Lionsgate under which they released Brothers, Season of the Witch and The Spy Next Door.[15] Ryan Kavanaugh characterized Rogue Pictures' films as appealing to teens interested in anarchy and edgy, anti-establishment movies. Kavanaugh intended to start a corresponding lifestyle brand that would market clothing, video games, and social networking to this target audience through a website to be known as Roguelife.[16][17]

In 2010, Relativity Media ventured into India with the help of Asian billionaire Keyur Patel who also owns two major TV Networks and has major investments in India in satellite, theatre chain and media productions.[18]

On July 6, 2010, Relativity and Netflix announced a five-year-plus Pay-TV deal. The first two films to stream on Netflix were The Fighter and Skyline.[19]

On July 23, 2010, Relativity acquired the 45-person marketing and distribution staff of Starz' Overture Films, making it a "Mini-Major".[20] The studio distributed its first film on December 3, 2010. The Warrior's Way was directed by Sngmoo Lee and starring Jang Dong-gun, Geoffrey Rush and Kate Bosworth. On May 20, 2012, it was reported that Relativity and EuropaCorp signed a co-production and co-financing deal on two movies and Relativity will distribute in U.S.[21][22] Relativity also has co-production deals with Atlas Entertainment including Project.[15]

In September 2011, Robbie Brenner was promoted from Executive Vice President, Production to President, Production.[23]

On November 27, 2011, it was reported Ron Burkle loaned $200 million to Relativity for Immortals and Mirror Mirror.[24]

On August 14, 2011, it was reported that Relativity was investing in SkyLand Film & Television Cultural Development Ltd, a China-based production company, signaling new opportunities in the Chinese market. One of the first arrangements was that the movie 21 and Over was partially filmed in Dongshigu, China.[25] On May 18, 2012, it was reported that Relativity was in talks to buy German producer-distributor Senator Entertainment.[26]

On January 23, 2012, Ron Burkle, who had other entertainment investments including with Bob and Harvey Weinstein, purchased a large equity stake in Relativity Media from Elliot Capital Management (which was the second largest shareholder after Ryan Kavanaugh) for at least $800 million.[27][28] On May 31, 2012, Relativity and Ron Burkle announced they raised $350 million in funding for films and expansion. Ron Burkle will also join the board of Relativity, along with Jason Colodne and Jason Beckman who are partners at Colbeck Capital.[29][30]

On June 12, 2012, Relativity Media and Rogue sold 30 of their films to Manchester Library Company,[31] which was acquired by Vine Alternative Investments in April 2017.[32]

In July 2012, Relativity merged its Rogue Sports, a basketball agency with Maximum Sports Management, a football agency, and SFX Baseball into Relativity Sports.[33] On December 19, Relativity announced a new division, Relativity International.[34]

In 2013, hedge fund investor Carey Metz made a $10 million investment in Relativity Media based on what he later described as Ryan Kavanaugh's lies.[35]

In April 2013, Relativity partnered with Glenn Kalison to create a start-up film and performing arts school that sought to revive the tradition of a working studio and a school operating in sync.[36] Today the school is called Studio School Los Angeles and Variety has listed it in its Entertainment Education Report as a Best Film School for 2019.[37]

In July 2015, Relativity Media filed for Chapter 11 bankruptcy. With estimates of $500 million to $1 billion in liabilities and only $100-$500 million in claimed assets, the company's unpaid debts were reportedly paralyzing the company.[38] The bankruptcy filing came after a last-ditch effort from investors to salvage the company by preventing Ryan Kavanaugh and Relativity from carrying out any unsupervised transactions.[39] The company would remain in U.S. Bankruptcy Court reorganizing itself for nearly 8 months until March 2016.[40]

In September 2015, three women who were involved in a Relativity Media reality show filed a lawsuit alleging the company never followed through on promises to support the women in escaping sex work and gaining improved housing, educational, medical and legal situations. The first litigant said she was paid $250 for her appearance and assured the 'real' compensation would come in the form of assistance after the show. Two of the women also sued Relativity Media for not blurring their faces in footage as they had promised to do for the women. One of these women said she "has suffered incessant humiliation and embarrassment which continues to this day."[41][42]

On January 6, 2016, Relativity Media acquired Trigger Street Productions. Owners Kevin Spacey and Dana Brunetti were given the roles chairman and president of Relativity Studios, respectively.[43] That March, Spacey announced that he would not accept Relativity's offer; Brunetti's position is still in place.[44]

On January 26, 2016, Relativity Television, Relativity Media's television division, became an independent company named Critical Content after the post-bankruptcy.[45]

On March 18, 2016, the company reemerged from the supervision of U.S. Bankruptcy Court Judge Michael Wiles.[40] In the wake of the bankruptcy, Ryan Kavanaugh chose to pay himself $2.6 million between April and November 2016 while his company failed to pay bankruptcy fees or file tax returns.[46]

On September 8, 2016, it launched R2 Entertainment which will be based in Canada and is now an independent film distributor focused on releasing films with budgets under $15 million. It will be co-headed by Mark Kassen and Dana Brunetti.[47]

On October 28, 2016, Kavanaugh announced that he was selling Relativity to Singapore-based social networking platform YuuZoo for $250 million.[48][49][50] Other companies have attempted to bid, including Chinese technology company Lenovo.[49] On March 2, 2017, YuuZoo announced they were canceling the investment in the fledgling studio saying "conditions precedent to the investment had not been met".[51]

In May 2018 the company filed for bankruptcy once again and arranged to sell all of its assets.[10] The U.S. Trustee's office expressed concern at the bankruptcy filing, saying that it appeared "designed to benefit Kavanaugh and lender UltraV Holdings at the expense of other creditors" and advocated for a robust investigation. This concern was partially based on the negligence of Relativity to satisfy even the administrative fees owed from the 2016 bankruptcy. Greg Zipes, the attorney for the U.S. trustee's office in New York wrote "the Debtors [Relativity Media] have apparently been unable to pay even the administrative claims owed under the confirmed (bankruptcy) plan” of 2016... In summary, while the Debtors appear to have raised some capital and paid down some debt, their finances are largely a mystery, apparently even to themselves.” The filing from the trustee's office also uncovered the $2.6 million Kavanaugh paid himself between April and November 2016 while remaining delinquent on what Relativity owed from the bankruptcy agreement. The trustee's office also expressed concern that this 2018 bankruptcy filing might be an 'arm's length transaction' as Kavanaugh continued to have inappropriate access to computer systems, email, bank accounts, and servers at Relativity after the filing stated Kavanaugh had already left the company.[46]

In June 2018, Netflix sued Relativity Media for breaching an exclusivity agreement after five films that were to be exclusively featured on Netflix were provided to Amazon and Starz. According to the suit, Netflix paid Relativity Media for licensing fees and exclusive rights to stream The Lazarus Effect, The Woman in Black 2, Beyond the Lights, And So It Goes, and Hector and the Search for Happiness, but Relativity's led to their loss of control over the titles which third parties then distributed to Amazon and Starz. Netflix also alleged Relativity Media failed to provide their contracted number of films. Relativity Media promised to provide Netflix with 22 films between 2016 and 2018, including eight in 2017, but allegedly delivered only three.[52]

In June 2018, an arbitration case found that executives from Relativity Media, including Kavanaugh, had fabricated a memo alleging sexual harassment by a former co-president of the company. A forensic audit of Relativity Media found that the memo had been altered by a user named "kav kav".[53] Kavanaugh stated that the finding was "patently false" and filed a counterclaim alleging a violation of the arbitration process.[54]

Also in June 2018, investor Carey Metz filed a lawsuit against Relativity's CEO Ryan Kavanaugh alleging Kavanaugh's deceptive representations of his proprietary algorithm had defrauded Metz of $12.5 million. After a 5-year relationship with Relativity, Metz described Kavanaugh's algorithm as a poor predictive tool which Relativity used only inconsistently in determining which films to finance.[35]

In August 2018, the US Bankruptcy court approved the sale of the company to Ultra V Holdings.[1]

Ultra V Holdings, through Relativity Media, acquired U.S. distribution rights to Come Away in October 2020 with a November 2020 release on PVOD and in theatres.[citation needed]

Businesses[]

Relativity Media has seven divisions: Relativity Studios, Relativity Media Home Entertainment, Relativity International, Relativity Sports, Relativity Digital Studios, Relativity Music and Relativity Education. It also has four subsidiaries: Rogue, Trigger Street Productions, Madvine and R2 Entertainment,[47] and one joint venture, R.E.D. (Relativity.EuropaCorp.Distribution).

Relativity Studios[]

Relativity's film production division was its first and remains its largest division.[55] Relativity Studios has produced, distributed or structured financing for nearly 200 motion pictures, generating more than $17 billion in worldwide box-office revenue and earning 60 Academy Awards nominations.[56]

Relativity Media Home Entertainment[]

Relativity Media Home Entertainment offers access to Relativity titles across all major digital download, video-on-demand and DVD/Blu-ray platforms. In addition to the studio's theatrical films, the division also releases select titles from Relativity's partner companies.[56]

Relativity Media International[]

Relativity Media International oversees global sales and distribution management of both the studio's own films as well as third-party releases. To date, its pictures have grossed approximately $1 billion at foreign box offices.[57]

Relativity Sports[]

Relativity Sports is one of the largest professional sports agencies in the world, providing more than 300 NBA, NFL and MLB athletes with services ranging from contract negotiation to custom film and television content production.[58] Relativity Sports and its agents have negotiated contracts totaling in excess of $2.5 billion.[33][59]

Relativity Digital Studios[]

Relativity Digital Studios is a production and graphics team that produces, directs and edits web series and creates special effects. In addition, the division creates with internet personalities campaigns in support of Relativity films and develops branded entertainment campaigns that marry brand partners with relevant Relativity divisions.[60]

Relativity Music Group[]

Main article: Relativity Music Group

Relativity Music provides in-house music supervision for films, in addition to releasing soundtracks and score albums from both major and studios and TV networks.[56]

Relativity Education[]

Relativity Education offers an array of film, media and performing arts programs, ranging from long-term programs to summer workshops.[56]

Filmography[]

  • List of Relativity Media films

References[]

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  2. ^ Block, Alex Ben (20 January 2013). "Relativity Media Lays Off Ten". Hollywood Reporter. Retrieved 18 September 2015.
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  4. ^ McNary, Dave (July 2, 2014). "Relativity Media Launching Digital Division for Brands, Hires Chief Marketing Officer". Variety. Retrieved July 4, 2014.
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