Trump’s Treasury Pick Steven Mnuchin to Sell His Stake in Warner Bros. Films

Steven Mnuchin - Getty - H 2016
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A financial disclosure details his significant holdings in the entertainment industry, including a company with stakes in 85 films including 'Batman v. Superman,' 'Max Mad: Fury Road' and 'Sully.'

Steven Mnuchin, the president-elect's nominee to head the U.S. Treasury Department, will divest his interest in about 85 Warner Bros. films including Batman v. Superman: Dawn of Justice, Mad Max: Fury Road, and Sully. The stakes in those movies could be up for sale soon.

Mnuchin's plan to exit RatPac-Dune Entertainment, the financing entity he launched in 2013 with Australian billionaire James Packer and filmmaker Brett Ratner, was revealed in a letter sent to an ethics lawyer at the Treasury Department and obtained by The Hollywood Reporter. In the letter, Mnuchin also writes that he “will not participate personally and substantially in any particular matter that to my knowledge has a direct and predictable effect on the financial interests of the entity until I have divested it.”

As Donald Trump fends off questions about holding onto his business empire, his cabinet selections are working to satisfy any conflicts of interest that may arise from personal assets. Mnuchin made much of his significant fortune in the housing industry as chairman of Pasadena-based OneWest, but he became highly active in motion picture investments about a half decade ago, especially in his partnership with RatPac. His Dune finance vehicle once had a deal with 20th Century Fox, but that was terminated in 2015, according to Mnuchin's financial disclosures. Instead, one of Mnuchin’s largest assets is Ratpac-Dune’s agreement with Warner Bros., which he values at between $5 million and $25 million.

According to a financial disclosure form released Wednesday by the U.S. Office of Government Ethics, the Warner Bros. agreement involves an interest in the rights to 52 existing and 23 future films by the studio. RatPac-Dune is a passive investor and receives profits on each film in the Warners slate. It also has a copyright interest in the films.

Although it’s not clear whether these assets present a conflict of interest, Mnuchin, if confirmed by the U.S. Senate, will have a hand in tax policy, and federal law provides tax incentives for film production inside the U.S. According to one source, Mnuchin is highly familiar with movie tax credits, having earned a producer role on Warren Beatty’s recent film, Rules Don’t Apply, in part by helping out on that front.

“It would seem like he would need to remove himself from any industry where his personal financial interest might bias his policy making or would raise a red flag,” says Hana Callaghan, an ethics expert at Santa Clara University. “Generally, best practices would be to divest or put assets in a blind trust so there’s not even the appearance of impropriety.”

Mnuchin is looking to satisfy this by divesting within 120 days of his potential confirmation. Given that his partners in RatPac-Dune are extremely wealthy individuals, one source predicts either Packer or Ratner simply will assume Mnuchin's share in the company. Or they could recruit another investor to take on Dune's role.

At a confirmation hearing, it is expected Mnuchin will face fire for his history in the housing industry. Sen. Elizabeth Warren (D-Mass.) has called him the “Forrest Gump of the financial crisis.” But Mnuchin’s time in Hollywood also has been rocky, most notably when he was co-chairman of Relativity Media. He resigned from the Ryan Kavanaugh-led studio shortly before it declared bankruptcy in July 2015. In the lead-up to the bankruptcy, however, Mnuchin’s OneWest bank pulled tens of millions from bank accounts after having made significant loans to the studio.

Despite this, Mnuchin’s financial disclosure reveals he received $1 million to $5 million in income from Relativity.

The financial disclosure — which also details other assets, from his Beverly Hills home to a 1978 Willem de Kooning oil painting, collectively worth at least $166 million — holds some surprises, such as a large stake in iHeartCommunications, the radio conglomerate. He lists the holding of a bond valued between $5 million and $25 million.

Warner Bros. declined comment.