Dialogue: Ryan Kavanaugh


Ryan Kavanaugh, CEO of Relativity Media,has been at the center of several major private-equity-backed slate deals whose performances have been much debated. The Hollywood Reporter's Stephen Gallowaycaught up with Kavanaugh, 32, at a film conference in Abu Dhabi to ask him where these deals stand.

The Hollywood Reporter:
A recent news report said the Gun Hill I fund would bring its investors $150 million. Do you stand by that number?
Ryan Kavanaugh: That number does not sound crazy.

THR: Did you renegotiate the deal to make it profitable?
Kavanaugh: Sony made an adjustment to the deal to help make it more profitable for the investors. They were very gracious.

THR: Where does Gun Hill II stand?
Kavanaugh: There are four movies out and there are 14 left. The ones that are out are "Evan Almighty," "I Now Pronounce You Chuck and Larry," "The Messengers" and "Marie Antoinette." Let's say -- and these are not the numbers, but hypothetically -- "Evan Almighty" lost $50 million and "Chuck and Larry" made $25 million; the next movie could make $25 million and you're at break-even. Nobody can say four movies into a slate what the deal looks like.

THR: Is it fair to say the hedge funds have cooled toward Hollywood?
Kavanaugh: There is definitely a cooling, but I wouldn't say they've completely cooled off. Six months ago, this was out of control -- the financial world threw so much money at Hollywood and there were a lot of bad deals that were getting a lot of attention. Now, just like any other business, a good deal will get done. But those (bad) deals will not happen any more.

THR: How dependent has the film industry become on private equity?
Kavanaugh: I don't know if studios are totally dependent, but it is an important component of films today. It would have a real impact on Hollywood if this money were to go away. The studios are now having to give deals that are more fair and more balanced. We have learned a lot from the initial deals, all of us, but I don't see them going away.

THR: What has changed in those deals and in the renegotiations?
Kavanaugh: We and the studios now understand that if the studio makes money, we make money; if we lose money, the studio loses money. When they win, we win. When they lose, we lose.

ON THE MONEY: On Nov. 7-8, the Nielsen Co., parent of The Hollywood Reporter, will join with Dow Jones to present the Media and Money conference at the Grand Hyatt in New York. The event will include discussions with some of media and entertainment's top dealmakers and investors, including Viacom chair Sumner Redstone; Time Warner president and COO Jeffrey Bewkes; Michael Eisner of the Tornate Co.; Roy Salter of the Salter Group; Daniel Snyder, owner of the Washington Redskins; Michael Lynne, co-CEO of New Line Cinema; Relativity Media CEO Ryan Kavanaugh; Chip Seelig, managing director of Dune Capital; Norman Pearlstein of the Carlyle Group; Columbia Pictures COO Bob Osher; and Jeff Berg, chairman and CEO of ICM, as well as panels moderated by THR executive editor Paula Parisi and New York bureau chief and business editor Georg Szalai. For more information, visit mediaandmoneyconference.com