Sony Pictures Loses Key Co-Financing Partner LStar Capital
The studio says the decision to end the partnership was mutual.
Sony Pictures Entertainment is losing key financing partner, LStar Capital.
LStar struck a $200 million slate financing deal with Sony in 2014, when former Sony vice chairman Amy Pascal was running the film studio. LStar is backed by Texas-based private equity firm Lone Star.
The pact was to have run through 2019 but after sustaining repeated losses, LStar grew wary and the relationship grew sometimes strained. As first reported by The Hollywood Reporter, LStar pulled its backing of 2016 summer tentpole Ghostbusters about a month before it went into production.
Insiders say Sony Motion Picture Group chairman Tom Rothman was not part of the 2014 slate deal with LStar, and that he wanted the arrangement to end. Sources says the studio isn't in talks with any other potential slate partner.
"Lone Star has been a great partner for several years and as anticipated, the deal has concluded — and on a high note. The decision to part ways was mutual, and won’t impact the studio’s plans or our strong slate of upcoming films moving forward," the studio said in a statement.
Hollywood studios (other than Disney) pursue strategic partnerships to help shoulder the cost of financing their movies and to hedge their risk.
LStar lost money on the vast majority of the 30 films it co-financed, including Passengers, The Brothers Grimsby and Aloha. Wins included the Hotel Transylvania series, as well as Spider-Man: Homecoming, currently in theaters.
Originally, LStar had been expected to co-finance 25 percent of upcoming films The Emoji Movie, Flatliners, The Star, Peter Rabbit and the next Hotel Transylvania. But as the relationship between Sony and LStar cooled, the studio didn't count on such financing to proceed with the projects and, in some cases, lined up other partners, such as with Cross Creek on Flatliners and Walden Media on The Star.
The LStar deal expires at midnight, when the money was due on Emoji. One outfit that had been in talks to buy out LStar's profit participation and take over the slate deal was the Beverly Hills-based DMG, according to another source.