In a last-minute shift in Relativity Studio’s post-bankruptcy plans, Kevin Spacey has opted out of assuming the chairmanship of the embattled studio, court filings reveal.
Relativity Media said it has formally inked a deal for Spacey’s producing partner, Dana Brunetti, to be president of production running film and TV operations. Relativity also claimed to have submitted documentation to the bankruptcy court proving that it has raised $100 million in new funding. However, at several points both before and after a string of film flops and debt obligations pushed Relativity into bankruptcy last year, the company has claimed to have secured financing that it ultimately failed to enlist.
In a declaration, Brunetti said he looked forward to partnering with Relativity founder Ryan Kavanaugh and said that as soon as the company was out of Chapter 11, he would fill out his production team and development slate.
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“I believe that the company has tremendous potential, and I welcome the challenge to take the company to the next level,” said Brunetti.
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Brunetti added that at Relativity, he planned to make “character driven, compelling stories…for mass audiences.” He will share greenlight authority with Kavanaugh, according to an employment agreement.
In his own statement attached to Brunetti’s declaration, Spacey said, “Now that I have a much deeper understanding of the specifics of the amount of work that will be needed to shepherd the company through this transition I have concluded it is work that I neither have the time nor the wherewithal to take on.”
It is not clear if Spacey’s exit will imperil Relativity’s emergence from bankruptcy. U.S. Bankruptcy Court Judge Michael Wiles had made signing deals with both Spacey and Brunetti a condition for approving the company’s exit from Chapter 11, as well as proof of its financing.
There had been mutterings that Spacey was wavering in his commitment to run the studio. For sure, the actor does have a full dance card. In the coming months, he will shoot a fifth season of “House of Cards” in Baltimore and complete roles in “Billionaire Boys Club” alongside Taron Egerton and Ansel Elgort, as well as Edgar Wright’s TriStar action-comedy “Baby Driver.” Other industry sources say Spacey was concerned about the financial health and future prospects of the company, as well as the amount of work needed to get the studio back on its feet.
Through their Trigger Street label, Brunetti and Spacey have produced such films as “The Social Network” and “Captain Phillips.” Like Spacey, Brunetti has his own, non-Relativity commitments. He will continue to serve as producer of the two upcoming sequels to Universal’s “Fifty Shades of Grey.”
The plan to have Spacey serve as chairman came together as Brunetti began discussions with Kavanaugh last October. When the opportunity first was broached, the pair were intrigued by the possiblity and thought it made sense to do it together, just as they have been partners in Trigger Street Productions.
But as they got down to the nitty-gritty of mapping out the new Relativity Studios, it became clear that Spacey’s commitments to starring in Netflix’s “House of Cards,” shooting numerous movies and serving as a trustee of London’s Old Vic theater, where he stepped down as artistic director last year would make it impossible for him to fulfill the chairman role at what is essentially a startup venture.
Moreover, there is no doubt that Brunetti has been the dominant force in running Trigger Street and doing the heavy lifting of producing its movies and TV shows. So while Spacey would have been a familiar face that might have helped Relativity in the investment community, Brunetti brings the most important skills needed to relaunch the studio from its post-bankruptcy ashes. It’s unclear if Relativity and Brunetti will seek to recruit or a new chairman or simply redirect the resources that would have gone to Spacey’s salary into funding for projects and infrastructure.
As part of the deal with Brunetti, Relativity will license the Trigger Street brand, Brunetti said in a filing. Earlier, Relativity had claimed that it acquired the production company, only to backtrack in court hearings.
Sources familiar with the situation say Brunetti expects to take virtually all of the Trigger Street staff with him to Relativity, in addition to hiring more executives. In essence, Trigger Street will essentially dissolve into the new Relativity, with Spacey surely retaining some financial interest in existing Trigger Street projects. Sources said Spacey remains supportive of Brunetti’s decision to pursue the Relativity offer.
But larger questions remain. Ever since news of Relativity’s courtship of Spacey and Brunetti broke in January, industry insiders have wondered why the pair would be attracted to working with Relativity given the bankruptcy and the seemingly ever-present drama surrounding Kavanaugh.
Sources said Brunetti’s interest is driven by the desire to build a new studio entity from the ground up. He’s known to have had executive job offers in the past at higher-profile companies but preferred to remain a free-agent producer rather than be plugged in to an existing operation. At Relativity, Brunetti will have the chance to shape the organization as he sees fit, bringing all of his in-the-trenches experiences as a producer. And sources said he is also receiving a modest equity stake in the new-model Relativity Studios, which gives him added incentive that wouldn’t likely be available at a major studio.
Brunetti’s deal with Kavanaugh is contingent on the parent organization delivering the promised funding of $100 million. If that doesn’t materalize, it’s understood that Brunetti can walk. Sources said Brunetti remains confident that Kavanaugh will make good on the funding. He’d better hope so, sources said, as Trigger Street began preparing for the segue to Relativity by winding up its first-look deals with Fox and Sony Pictures TV. Brunetti has also been busy hammering out carve-out agreements for existing projects, and wrapping up his obligations to others.
Sources said Relativity’s hope is to gradually build up to a volume of between six to 12 releases a year, with Brunetti maintaining a hands-on role as a producer. But for now, no new material can be put into play until the bankruptcy is completed and the new money is in place. The first order of business after the relaunch will be to devise release strategies for the handful of completed films that have been in bankruptcy limbo for months, including “Mastermind” and “Kidnap.”
Weighed down by film flops such as “Out of the Furnace” and “Brick Mansions,” Relativity filed for bankruptcy protection last summer, citing $1.2 billion in liabilities and assets with a book value of just $560 million. Last fall, its television business was auctioned off to a group of hedge funds that include Anchorage Capital, Luxor Capital and Falcon Investment Advisors. In bankruptcy, the studio has been able to wipe roughly $630 million from its books.
Court filings reveal that Joseph Nicholas, a Chicago investor who will oversee the company’s business operations, has agreed to provide $35 million in debt financing. The studio will also receive a $40 million loan from Midcap Financial Trust.
