'Spotlight' Studio Open Road Shopped to Potential Buyers as Owners Suffer Heavy Losses (Exclusive)

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'Spotlight'

Theater chains AMC Entertainment and Regal Entertainment launched the indie film distributor in 2011 but say they have each lost at least $50 million, even after its best picture Oscar win in 2016.

About a year ago, Open Road Films had every reason to celebrate. Spotlight, which it distributed in the U.S., won the best picture Oscar on its way to grossing $45 million domestically.

But 14 months later, the fate of the six-year-old distribution company, owned by two of the country's top theater chains and run by veteran film executive Tom Ortenberg, is unclear as its losses mount.

Joint owners AMC Entertainment and Regal Entertainment don’t intend to make any further investments in the venture after posting cumulative losses of nearly $50 million each between 2011 and December 2016, according to their 2016 annual report filings with the Securities and Exchange Commission in March and late February, respectively. And, according to multiple sources, Regal and AMC would like to sell the venture.

Open Road executives say the company is in good financial standing, and that it can operate without additional money from its two owners. The Los Angeles-based company also has a library of films that includes such hits as Spotlight and Chef. Further, Open Road's upcoming release slate is populated with high-profile titles, including a Reese Witherspoon movie and a Thurgood Marshall film.

"Open Road continues to be a wholly owned, 50-50 joint venture between AMC and Regal. They have provided us with our working capital, and we have zero long-term debt," Ortenberg says in a statement to The Hollywood Reporter. "In addition, we have a library of 37 theatrical titles that has never been leveraged. Our upcoming slate is easily our best ever and is the culmination of the many successes of the past several years."

At the same time, Open Road declined to comment on whether it is for sale. Ditto for AMC and Regal. "We don't comment on speculation," an AMC representative says.

In a joint statement, Regal and AMC add: "Our investment in Open Road Films is a marathon and not a sprint. We are pleased with the performance of Open Road, including the crescendo the company established last year when Spotlight won the Oscar for best picture, among other notable successes by the company. The motion picture business is a cyclical one and, with its exciting upcoming slate, AMC and Regal remain confident in Open Road's future."

But some filmmakers with movies that are awaiting releases through Open Road are nervous, especially considering the executive turnover. Last week, Jonathan Helfgot exited as marketing president to take a job at Fox. (He was succeeded by Loren Schwartz, who did prior stints at Warner Bros. and Screen Gems.) Helfgot was the second marketing president to exit in the span of a year, following Jason Cassidy, who left in March 2016 — not long after veteran acquisitions chief Peter Lawson, who played a pivotal role in bringing in Spotlight, parted ways with Open Road.

Meanwhile, Open Road saw Terry George’s big-budget The Promise, starring Christian Bale and Oscar Isaac, bomb in its April 21 debut, grossing $4.1 million against a $100 million budget. While Open Road was simply distributing the film for a fee as part of a service deal —and didn’t have a financial stake in the Armenian genocide drama — it still represented another box-office flub after a string of post-Spotlight misfires that included Snowden, Fifty Shades of Black and Max Steel, though Max Steel was a service deal only. Those misfires have further raised questions about what direction Open Road is pursuing.

Historically, independent distributors, such as The Weinstein Co. and Sony Pictures Classics, have focused on acquiring prestige fare aimed at adult audiences and awards voters.

AMC and Regal had a different goal for Open Road: They intended for the outfit to specialize in more commercially minded fare that they could showcase on their vast network of screens in between the big studio tentpoles. In some cases, the experiment worked: The Grey, a 2012 action pic starring Liam Neeson, earned $51.6 million, and The Nut Job, a 2014 animated film, grossed $64.3 million — Open Road’s best showing to date. Both movies were released in January, as was A Haunted House, which scored a solid $40 million in 2013. David Ayer's End of Watch was another notable win in September 2012, grossing $41 million.

But Open Road’s timing wasn’t great. It launched just as the major studios began to realize there was big money to be made beyond the summer months and year-end holidays. The studios began transitioning to a year-round calendar, making release planning more difficult for smaller outfits like Open Road. The company began putting its releases up against bigger movies. The action film Homefront, starring Jason Statham, was released over Thanksgiving 2013, and Justin Bieber’s Believe came out that Christmas. Both fell flat at the box office, although Homefront did well in home entertainment.

“They sort of lost their identity. There isn’t enough there to become a consistently profitable studio,” says Wall Street analyst Eric Handler of MKM Partners. “They’ve had critically acclaimed films, including Spotlight, Nightcrawler and End of Watch, but they haven’t always picked the best films. It’s very inconsistent.”

The arrival of Netflix, and then Amazon Studios, presented another challenge for Open Road, as well as every other indie film acquisition company. The streamers began invading the festival scene, paying premium prices for films.

The performance of Open Road’s slate through the remainder of the year will be crucial.

The Nut Job 2, featuring the voices of Will Arnett, Katherine Heigl and Maya Rudolph, opens Aug. 11. Home Again, a romantic comedy directed by Hallie Meyers-Shyer and starring Reese Witherspoon, follows on Sept. 8. The high-profile project is produced by Meyers-Shyer’s mother, filmmaker Nancy Meyers. On Sept. 15, Marc Forster’s All I See Is You, starring Blake Lively and Jason Clarke, will hit theaters. And a month later, the Thurgood Marshall biopic Marshall, starring Chadwick Boseman, launches Oct. 13, with hopes of courting awards attention.

Open Road also is targeting a first-quarter 2018 release for director Brad Furman's crime thriller LAbyrinth, starring Johnny Depp as the real-life Los Angeles police detective who investigated the murders of rappers Notorious B.I.G. and Tupac Shakur.

And dated for Feb. 16 is Show Dogs, a live-action family comedy directed by Raja Gosnell, who helmed Beverly Hills Chihuahua, Scooby-Doo and The Smurfs. Ironically, it’s just the sort of movie — a commercial play released to take advantage of what’s often an off-month at the box-office — that AMC and Regal originally hoped Open Road would deliver. 

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