Relativity Media

Relativity Media, LLC is an American independent digital media and film production company founded on May 18, 2004 by Lynwood Spinks and Ryan Kavanaugh.^[3] The company brokered film finance deals and later branched into film production and other entertainment ventures. The company was commercially successful prior to bankruptcy.

In 2015, Relativity Media filed for Chapter 11 bankruptcy after lawsuits and missing loan payments. The bankruptcy was noted as one of the most notorious in entertainment industry history. As a result, the company began selling off previously acquired films. Relativity Media reorganized and emerged from bankruptcy in March 2016, but in May 2018 it filed for bankruptcy again. The studio is now a wholly owned subsidiary of UltraV Holdings.

Relativity Media was founded by Ryan Kavanaugh and Lynwood Spinks in 2004. Kavanaugh convinced Spinks, a former Carolco Pictures executive^[12] to invest $1 million into the venture.^[13] Relativity began operations as a middleman brokering deals between film studios and banks,^[14] private equity firms, and hedge funds to finance multi-film slates.^[15] In 2005, the funding needs of Hollywood studios became more critical when a German tax shelter that had supported them for 25 years^[16] was eliminated,^[12] and Relativity Media met that need with Wall Street’s plentiful funds in the early 2000s.^[13] Relativity arranged financing for slates produced by Warner Bros., Universal Pictures, and Sony Pictures.^[13] For each film, Relativity received equity and brokerage fees of $500,000^[13] to $1 million,^[15] and Kavanaugh arranged an executive producer credit for himself.

In 2007, Kavanaugh sued Spinks after the partners had a falling out.

In 2008, Elliott Management bought 49.5% of Relativity Media for $67 million^[ and provided access to about $1 billion in capital and a revolving credit line.^[14] The increased funds allowed Relativity to expand involvement with film production companies. In 2009, Relativity reached an output deal with Lionsgate, and bought Rogue Pictures from Universal Pictures for $150 million.^[18] In 2010, a deal with Netflix allowed Relativity Media-owned films to be streamed on the platform, and Relativity purchased Overture Films‘ distribution and marketing operations.

Elliott Management’s funding eventually allowed Relativity Media to begin operating its own studio, producing and distributing its own films.^[24] The studio distributed its first film on December 3, 2010.

In 2011, Elliott Management pulled its financial backing from Relativity amid reports of tension between the companies.^[25] In May 2011, Relativity’s president Michael Joe moved to Elliott Associates to manage their investment in Relativity^[ after Elliott had invested hundreds of millions of dollars with very little in return. Kavanaugh had structured a slate deal between Elliott and Universal titled “Beverly 2” that comprised the majority of Elliott’s investment in Relativity at the time, but the investment turned out poorly for Elliott and further enormous losses were forecasted. Relativity was also scheduling their own movies opposite Universal’s, including competing Snow White adaptations,^[28] which Universal executives saw as Relativity using “Beverly 2” funds to gain a competitive advantage. Elliott put pressure on Kavanaugh to hand Beverly 2 over to Elliott in exchange for releasing Michael Joe from his non-compete.^[29] Two weeks before the opening of Relativity’s first big-budget epic Immortals, Elliott reportedly threatened to further reduce its investment unless Kavanaugh made significant concessions when Relativity was already short on funds.

Relativity took out a $200 million loan from Ron Burkle, who had other entertainment investments including with Bob and Harvey Weinstein through his associated firm Colbeck Capital. The loan was taken in part to cover the multi-million dollar marketing costs for Immortals.^[30] In January 2012, as Relativity continued to struggle financially, Kavanaugh sought a new major investor, and Burkle, and his invested between $600 million and $800 million^[31] and became a shareholder.

In May 2012, Relativity announced that Colbeck structured $350 million in debt financing for the company, with Elliott departing from its investment in the company. Later that month, it signed a co-production and co-financing deal on two movies with EuropaCorp that Relativity would distribute in the United States. Relativity also has co-production deals with Atlas Entertainment including Project.^[

As a result of the bankruptcy, Relativity sold off previously acquired films, including:

• Suffragette was sold to Focus Features for North America and select international territories. Kavanaugh resigned as producer of the film.
• Jane Got a Gun was acquired by TWC.
• The Bronze was purchased by Sony Pictures Classics and Stage 6 Films.
• Love the Coopers was bought by Lionsgate and CBS Films.
• The Space Between Us and The Foreigner were sold to STX Entertainment.
• Solace was acquired by Lionsgate Premiere.
• Collide was purchased by Open Road Films.
• Kidnap was bought by Aviron Pictures.
• Before I Wake and Animal Crackers were sold to Netflix.
• Shot Caller was acquired by Saban Films.
• Hillsong: Let Hope Rise was purchased by Pure Flix Entertainment.
• Fallen and The Secret Scripture were bought by Vertical Entertainment.

Relativity’s distribution rights to EuropaCorp films were transferred to STX Entertainment in January 2017.

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”