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A version of this story first appeared in the July 4 issue of The Hollywood Reporter magazine.
Joe Roth‘s run at Revolution Studios is coming to an end, 14 years after he launched the company that became one of the most-talked-about failures in recent Hollywood history. Sources say a deal is close for him to sell the production entity for about $500 million.
The buyer is Fortress Investment Group, a publicly traded investment company based in New York that manages more than $62 billion in hedge funds. The sources say Fortress believes there’s continued value in Revolution’s library of 46 movies (including flops like Hollywood Homicide and the more successful Click and xXx) along with two cable TV series (Anger Management and Are We There Yet?).
After a career as a producer and serving as head of movie production for both Fox and Disney , Roth, 65, founded Revolution in 2000 with an initial investment of about $250 million. The company then spent more than $2.6 billion on production, with financing coming from such sources as Sony, Starz and Fox. Under the initial deal, Revolution was to produce six to eight pictures a year, representing about a third of Sony Pictures’ annual slate.
But Revolution never delivered the kind of hits Roth had hoped for despite a panoply of vehicles featuring such superstars as Julia Roberts, Bruce Willis, Tim Allen and Nicolas Cage. In fact, it became a magnet for bad press thanks to pictures including the Ben Affleck–Jennifer Lopez disaster Gigli and Tears of the Sun, starring Willis.
Roth eventually shut down movie production in 2007, but the company has continued in existence. There have been rights sales for the movies to Netflix and others, which helped Roth continue to pay down bank debt. There were also the two TV spinoffs. Roth has been rumored to have been looking for a buyer since at least 2008.
If the sale goes through, Roth (who’s represented by Evolution Media Capital) is in line for a multiyear consulting contract, mostly for television, but no longer will run the company.
The new Revolution will be led by current employees Vince Totino, Scott Hemming and Marla Levine. Totino is COO, Hemming is senior vp and Levine is currently the general counsel.
The plan is to have a sales company that will focus on maximizing the licensing rights to the library of movies. Sources say no decision is made yet, but an existing international sales company will most likely be brought in to handle transactions outside the U.S.
The main thrust will be into television where Revolution will have a full-fledged producing operation to develop shows for broadcast, cable and digital based on spinoffs from the movies and original productions.
Roth’s original stake gave him ownership of 62 percent of Revolution. He will split or share proceeds from the sale with Sony, Starz, Fox, several foreign distributors (including Senator from Germany) and former employees Rob Moore (now vice chairman of Paramount Pictures),Todd Garner (a producer whose credits include Paul Blart: Mall Cop) and the estate of the late Tom Sherak. How much cash they’ll see is unclear, but Fortress will also pay off the remaining debt.
Fortress gets a library that soon will become a lot more valuable, as the movies revert to Revolution beginning in 2016 after years of being tied up in distribution deals with Sony, Starz and Fox. Rights to all of the titles should revert back to Revolution no later than 2022.
Fortress, which oversees hedge funds and bond funds, invests in distressed assets and everything from railroads to gaming companies. It has made investments in Hollywood before, including a stake in Legendary Pictures, but this will be the first time it will take the leading role in an entertainment company.
Fortress, according to sources, believes that content is proving to having lasting value as the distribution platforms proliferate; and that some movies lend themselves to remakes for both the big screen and for TV.
Since shutting production, Roth has redeemed himself outside Revolution by producing such hits as Alice in Wonderland, Heaven Is for Real and, most recently, Maleficent.
Neither Roth nor reps for Fortress would comment.
Here is a list of the top five highest-grossing movies in the Revolution library, with year of release and worldwide gross: 1. xXx (2002) $277 million; 2. Click (2006) $238 million; 3. Anger Management (2003) $196 million; 4. Black Hawk Down (2001) $173 million; 5. Maid In Manhattan (2002) $155 million.
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