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Kevin Spacey will not be leading Relativity after all.
“It is with much thought and consideration and after many discussions with those I trust most that I have decided not to go through with accepting the role of chairman at Relativity Studios,” he states in a bankruptcy court declaration obtained by The Hollywood Reporter. “I can think of very few things more exciting to an actor than being given the opportunity to work with fellow actors, writers and directors with the ability to bring their creative works to light. That was, and still is, a very powerful idea for me.
“However, as Relativity emerges from bankruptcy and now that I have a much deeper understanding of the specifics of the amount of work that will be needed to shepherd the company through this transition, I have concluded it is work that I neither have the time nor the wherewithal to take on,” adds Spacey.
A Relativity spokesperson said, “We couldn’t be happier with the support he gave and relationship we have built with Kevin and for his instrumental work in closing this deal especially. For working with us to make sure Relativity has the tools to continue on the good work of Trigger Street.”
The studio is still moving forward with Spacey’s Trigger Street partner Dana Brunetti, who will run Relativity with CEO Ryan Kavanaugh when it emerges from bankruptcy.
Spacey’s exit follows a dramatic six months for Relativity, which filed for bankruptcy in July and has been embroiled in one of the most contentious and closely watched bankruptcies in Hollywood history. But then Relativity stunned Hollywood when it announced that Spacey and Brunetti would be taking the reins of Kavanaugh’s embattled studio.
The Spacey-Brunetti move was a PR coup for Kavanaugh, and certainly impressed U.S. Bankruptcy Judge Michael Wiles, who approved a plan of reorganization for Relativity Media conditional on last-minute documentation on new financing and the studio’s Trigger Street deal with Spacey and Brunetti. When Netflix, for instance, objected to the plan on the basis that it did not have adequate assurances that Relativity could deliver a promised minimum number of films, the judge noted that Relativity had tapped individuals that Netflix had long worked with. (Spacey and Brunetti are both executive producers of House of Cards, one of Netflix’s most important shows.)
When Spacey said he was taking the job, skeptics immediately questioned whether he would have the time to run a studio that badly needed to rebuild after its bankruptcy ordeal. Even Netflix openly wondered whether Spacey’s position was a done deal. His appearance via a taped message at the confirmation hearing in early February soothed concerns, but unbeknownst to many, the relationship would soon unravel.
In fact, according to one court document filed on Saturday, Spacey’s exit has been in the works for weeks. On Feb. 23, the parties signed a non-disparagement agreement with each other when it became clear that the potential hiring of Spacey had hit a snag.
Spacey’s commitment was always a question mark. Netflix just renewed House of Cards for a fifth season. That means that Spacey, who stars on the show, would soon embark on a grueling acting schedule for what is typically a 13-episode season. A source says the actor’s new House of Cards deal requires him to be on the East Coast set of the series for 200 days in the next 12 months.
Now Relativity will look to Brunetti to help turn around the company’s fortunes. Relativity racked up more than $1 billion in debt to its roughly $500 million in assets before the bankruptcy filing. But even with Trigger Street, Brunetti was seen as the creative force behind the duo, while Spacey was viewed as the figurehead. With Relativity, he was viewed as someone who could help repair some of the damaged relationships that have resulted in the wake of the studio’s bankruptcy, which saw many films hang in limbo, including the Kristen Wiig-Zach Galifianakis comedy Masterminds.
According to his employment agreement — also deposited with the bankruptcy court this weekend — Brunetti won’t have sole greenlighting authority. Instead, he and Kavanaugh will share such duties as deciding which films and TV projects will be produced or acquired by the company. Additionally, there will be a “Creative Advisory Board” for Relativity, consisting of Brunetti, Kavanaugh and Joe Nicholas, a hedge-fund guy who has poured more money into the studio than anyone else in recent months.
In fact, Nicholas is shouldering more of the financial burden in Relativity’s bankruptcy exit (that is, assuming the judge is still fine with the reorganization plan). The company has also submitted paperwork adjusting its exit financing arrangement. Originally, financial projections were based on the assumption of $78.4 million from an assumed term loan by Macquarie, a vendor advance, an equity raise and a convertible note. That’s now been revised into a $40 million loan from Midcap Financial Trust and an additional $35 million in debt financing from an entity owned by Nicholas, who will also be primarily responsible for future capital raises contemplated by the business plan.
The judge will review all the changes at a hearing on March 18.
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