Relativity extends relationship with Uni

Financial partnership now through 2015

Defying market conditions and skeptics' brickbats, Ryan Kavanaugh's Relativity Media has extended its film co-financing relationship with Universal through 2015.

The four-year extension was announced Wednesday and means Relativity will help fund 10-15 films per year with a total deal value likely to approach $3 billion. The precise value will depend on what film productions ultimately are picked to fund through the arrangement.

Relativity gets to pick which movies it will back, but Uni also gets to withhold some number of pics from the partnership. Universal expects to release 16-18 films per year over the span of the relationship, meaning Relativity will co-finance about three-fourths of its annual slates.

"We have had a genuine collaborative partnership to date, and we look forward to expanding on our ambitions together in the future," Universal exec vp Michael Joe said. "Their commitment to us means that we can continue to do what we do best: develop quality movies that appeal to filmgoers across the globe."

Kavanaugh lauded Relativity's partnership with Universal.

"Our deal has been very profitable to date, and the Universal creative, marketing and distribution team is unparalleled," Kavanaugh said. "They are true partners."

Relativity has also been involved in several other slate fundings, including two big deals with Sony. Although its studio partners have been lavish in their praise of the fundings, some in the more traditional finance community have sniped that such deals yielded disappointing returns for the hedge-fund investors who ultimately backed them.

Yet hedge fund and Relativity backer Elliott Associates must be happy enough: Elliott announced Monday it was providing Relativity with an unspecified additional cash infusion.

A Universal-Relativity financing struck in January -- known in the financial community as Beverly 2 -- was set to run through 2011. Sony's slate arrangement with Relativity is dubbed Beverly 1.

The latest Universal financing was a big surprise to most industryites. Most assumed the wave of hedge fund deals that have swept through Hollywood in recent years would ebb away in the currently turbulent credit environment.

Paramount recently decided against a slate financing with Deutche Bank after market conditions gave rise to deal terms deemed unattractive. Paramount rejected the proposed funding even though its Melrose 2 financing expired with the release of February's "The Spiderwick Chronicles."

Elsewhere, Disney had a now-lapsed slate financing called Kingdom, and the studio seems in no rush to tap new private capital. At MGM, it appears unlikely that Goldman Sachs' search for financial options for the Lion will reap much until market conditions improve.

It's possible the new Universal deal will get naysayers rethinking their gloomy forecasts. For if Elliott-backed Relativity can work a slate deal in the current conditions, why not others?

"You have to say -- he's impressive," a top industryite chuckled of the latest Kavanaugh coup.

Said Kavanaugh: "We just keep our head down and keep moving forward. Media in general and film specifically can be a great hedg to bad economic conditions, if the deals are structured right."
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