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Patrick Goldstein and James Rainey
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Like it or not, Relativity's Ryan Kavanaugh is now a bona fide studio mogul

Ryan_kavanaugh It's amazing how many studios have bitten the dust lately. MGM is flat on its back, Miramax is pushing up daisies, New Line has been absorbed into Warners while DreamWorks is now part of the Disney brand factory. Warner Independent and Paramount Vantage and Picturehouse are all kaput. But we've finally got a new studio mogul in town, Relativity's Ryan Kavanaugh, who is quietly in the midst of transforming Relativity into a real studio, having now acquired Overture Films' distribution and marketing operations from Starz.

Kavanaugh says that he's keeping Overture's marketing chief Peter Adee and distribution boss Kyle Davies, along with much of its remaining staff. Kavanaugh isn't saying much else so far, though, according to this post in Variety, he is full of praise for Adee and Davies, along with Starz, which he commends for "its smart leadership in helping us make this move."

It's a big move, since up until now Relativity has been putting its movies out through other studios, mostly at Sony and Universal. But now, with Kavanaugh having secured himself a pay-TV deal via Netflix, he's ready to roll out his own movies, including the genre-oriented fare he's been making through Rogue. What makes this especially fascinating stuff is that Kavanaugh doesn't do things the old-fashioned studio way. He decides what pictures to bankroll through a complex, "Moneyball"-style set of mathematical formulas that are designed to eliminate most of the crippling flops that have often led past indie financiers into crash 'n' burn infamy.  

According to this slightly wide-eyed story from Esquire, before Kavanaugh agrees to finance a picture, its particulars (principal actors, budget, genre, filmmaker, release date, MPAA rating) are "fed into an elaborate Monte Carlo simulation, a risk-assessment algorithm normally used to evaluate financial instruments based on the past performance of similar products.... After running the movie through ten thousand combinations of variables, the computers will churn out a few hundred pages that culminate in two critical numbers: the percentage of time the movie will be profitable and the average profit for each profitable run. Unless the movie shows the distinct probability of a return--no one at Relativity will reveal the precise green-light figure, but it's something like 70 percent--the script gets shredded." 

In other words, Kavanaugh makes no bones about his ulterior motive, which is profit, not art. He doesn't believe in big risks, preferring to hit solid singles and doubles, and occasional triples, like "Paul Blart: Mall Cop." As he told Esquire: "Everything has to run on the principle of profit. We'll never let creative decisions rule our business decisions. If it doesn't fit the model, it doesn't get done."

Of course, Kavanaugh backed "The Assassination of Jesse James by the Coward Robert Ford," a classic example of a misguided, and almost comically over-budgeted, art picture that lost a fortune, so I'm guessing he's still tinkering with that sophisticated computer formula. After all, you can only take statistical analysis so far, since "Moneyball's" hero, Oakland A's general manager Billy Beane, has been to the playoffs but never come close to winning a World Series.

On the other hand, the guys who ran Overture into the ground--Chris McGurk and Danny Rosett--were no great shakes at picking pictures either. I'm of the mind that Hollywood is still a lot like a Vegas casino, where you can get hot and have a great run, but you're never gonna beat the odds all the time. Still, it will be nice to have Kavanaugh around, playing with the big boys. Like so many brash younger entrepreneurs of his generation, whether it's Mark Cuban, Jay Z or Ari Emanuel, Kavanaugh is smart, always eager to try something new and, best of all, he's never going to be dull.   

Photo: Ryan Kavanaugh with actress Kate Bosworth at a charity dinner in Beverly Hills last January. Credit: Charley Gallay /

Comments () | Archives (4)

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More power to him on many levels.
For every PAUL BART...there's going to be a chance with

He's taking chances on the decades old mix between
art, creativity and business of Hollywood.

Look, I'm a writer and moviemaker -- a storyteller.
And the day any of my fellow brothers and sisters on all levels
of movie making out there really think they need a big budget
and stars, etc., to make their exact movies, their exact way
with someone else's money -- I hope they have all open access
to someone else's money. More power to you.

But, if you look at the history of Hollywood, some of the best and
most powerfully creative movies were done on limited if not low budgets
and have stood the test of time.

As in film noir, b movies and genre movies.

I loved the ASSASSINATION; not so much with PAUL BART,
but it just wasn't my type of movie to go crazy over.
It had an audience no doubt and more power to it.

And in the digital age of now and the future, where new and powerfully motivating distribution models and equipment will be growing
everywhere for the globally diversified audiences?

Hope moviemakers really force themselves to be creative
with less money and more imagination...if they have the right backing
from the business side -- and that is part of the creative artists'
responsibility -- finding that right backing.

Because there's just no reason at all...with this new technology,
that a great movie can be made for under 1 to 5 million and have the production value of a 20 to 30 million dollar movie...once made on film.

And there's just way too much bad math going on in Hollywood for too long,
going in way too many pockets instead of up on the screen where it belongs.

But then I guess it's all RELATIVE - ty.

Nowadays, ALL movies are "big budget." The cost of marketing even the cheapest film is enormous. Unless that changes we're going to see a lot more of the sophisticated modeling used to choose which films get produced.

Again, such a hilarious lack of analysis on this blog. Here's the question you're not asking-- is it working? There is no algorithm that will successfully chose only hits. It's a great gimmick to get investors on board, but math and computer models can only help so much when building a slate.

As an example, here are the last four movies Relativity made with Universal: GREEN ZONE, WOLFMAN, REPO MEN and MACGRUBER. I certainly don't claim to know the intricacies of their partnership with Uni on these films, but I suspect there's a pretty big loss on that combo of movies. Of course, CHARLIE ST. CLOUD is coming up, so they've got that going for them.

I'm rather skeptical of Ryan Kavanaugh. His emphasis on supposed models that can predict commercially-successful movies should only fool the naive because art, whether low or high eyebrow, in some sense, is unpredictable. Put another way, there's a certain leap of faith filmmakers and investors must take.

Kavanaugh has a rather mixed track record. Before he started Relativity Media, he falsely told investors that he graduated from UCLA. He was found guilty of neglience in a lawsuit relating to the collapse of his venture capital firm and ordered to pay $7.7 million in damages, an amount that remains unpaid. After becoming a Hollywood financier, he structured deals that lost investors lots of money but continued to misrepresent the returns on the slates of films he put together. To paraphrase one critic, he's basically a fraud.

Lastly, you're forgetting the unprofitable films backed by Relativity Media such as All the King's Men, Evan Almighty, Nine, and Walk Hard: The Dewey Cox Story, in addition to those mentioned by another user.


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