Relativity goes after Rogue Pictures

In negotiations with Universal to acquire assets

Relativity Media is in negotiations with Universal to acquire the assets of Rogue Pictures, the studio's genre label, for as much as $150 million.

The proposed deal would see Ryan Kavanaugh's Relativity purchase more than 25 library titles, four upcoming films and more than 30 projects in development at Rogue, which was launched in 2004 as a division of Universal's Focus Features. In 2007, Rogue became an independent specialty unit of the parent studio.

The deal, if completed, would have an added benefit for film financier Relativity because it would allow Relativity to distribute the films it produces, as well as the Rogue titles it is acquiring, through Uni's distribution system.

As it moves beyond the hedge fund business to raise its own profile as a producer, Relativity has begun to produce movies separate from its slate investments at such studios as Universal and Sony. It has ramped up its own development activities, aggressively acquiring projects like "The Low Dweller," with Leonardo DiCaprio and Ridley Scott attached. But until now, it has lacked a consistent way to distribute its own product.

Universal would continue to market and distribute the Rogue films that Relativity is acquiring, and Relativity would also be able to turn to Uni to handle other titles. Uni would get a distribution fee. Although a 12.5% fee had been discussed, Relativity could end up paying less than 10%, according to one source.

Since Rogue's activities will be continuing under new ownership, it is not immediately clear how the acquistion will affect the unit's current execs and employees. Andrew Karpen and Andrew Rona currently oversee Rouge as co-presidents, with Karpen also serving as Focus president.

The discussions have been taking place for several months and are reaching a critical phase in the wake of Universal's recently completed distribution pact with DreamWorks. Universal releases about 18-20 titles domestically each year, plus another six films from Focus and another four from Rogue. While it will now have to accommodate DreamWorks titles, the studio said last week that it will be able to handle the films from all its labels.

At the same time, it is seeking ways to cut costs after NBC Uni CEO Jeff Zucker last week ordered a companywide reduction of 3% in next year's budget.

Neither Relativity or Universal would comment Monday.

The purchase would cover Rogue films now in postproduction, which include "Fighting," starring Channing Tatum and Terrence Howard; Platinum Dunes' "Unborn," from writer-director David Goyer; Wes Craven's "25/8" and a remake of "Last House on the Left."

Relativity also would pick up the first-look deals Rogue has with Platinum Dunes and Wes Craven, while Uni would get first right of refusal, for a set period of time, for any sequels based on any of the movies released.

The Rogue library that Relativity would be acquiring includes 13 films, including this summer's hit "The Strangers."

Rogue's development slate numbers 32 projects, ranging from the adaptations of the video game "Castlevania" and the comic book "Hack/Slash" to the 1980s teen movie remake "Three O'Clock High" and "Strangers 2."

Last month in a separate agreement, Relativity and Universal said they had extended and expanded their co-finance partnership through 2015, which will cover the majority of Uni's slate.
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