How Sony Pictures Answered Critics Going Into Thursday Investor Meeting With Cuts, Jeff Robinov Courtship, Blue Anchor Co-Fi
Oscar season is in full swing and is dominating attention, but the most important discussions taking place in town are being done with bankers in back rooms as heavyweight producers and co-financiers move around and will dramatically shape the future of studio event film slates for years to come. The players in the drama still to formalize landing places are Jeff Robinov and Graham King, Jerry Bruckheimer, John LaViolette and Joseph M. Singer’s Blue Anchor Entertainment. This after Thomas Tull’s Legendary Pictures left Warner Bros for Universal, and was replaced by Brett Ratner, James Packer and Steve Mnuchin’s RatPac Dune, which will co-finance the slates of Warner Bros going forward. Two of the next big moves seem to squarely involve Sony Pictures, whose heads Michael Lynton and Amy Pascal head into investor meetings on the Sony lot in Culver City on Thursday with some pending alliances that will greatly reshape their operations.
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The above players will be dealing in billions of dollars of production financing. RatPac Dune’s Ratner, Packer and Mnuchin fell into a right-place-at-the-right time windfall just as its Warner Bros deal commenced, and got kissed into Gravity as its first film. That put the venture off to a flying start as the film crossed the $500 million worldwide gross mark. I hear that Tull and Legendary might well get that deal underway in high style by co-financing Universal’s surefire blockbuster Jurassic World, though studio insiders said I’m getting ahead of myself because there is not yet a shooting script to show Legendary. While the RatPac Dune deal covers Warner Bros’ full slate, Tull gets to cherry-pick the films Legendary will co-finance, and the deal calls for a big Universal commitment on films that Legendary generates. This deal was papered by Uni president Jimmy Horowitz and chased aggressively by NBC Universal CEO Steve Burke as well as Donna Langley.
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All three of the other major players have yet to land, though Blue Anchor’s LaViolette and Singer are all but locked into the co-financing of future Sony slates. The conversation with Bruckheimer, who’ll soon leave Disney, is still between Warner Bros and Paramount. He doesn’t come with money, but he is a proven franchise hatcher whose priority to assemble popcorn pictures for global consumption makes him a better fit at those studios then at Disney, where Marvel, Pixar and DreamWorks hoover up most of the release slots. That left little maneuvering for the prolific Pirates of the Caribbean and National Treasure producer, whose long Disney relationship soured after The Lone Ranger become one of the summer’s high-priced casualties.
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The real X factor is Robinov, whom Sony is chasing (but not alone). Robinov’s deal is very much up in the air, even down to that he’ll definitively partner in a monied shingle with King. Robinov could still decide to be an executive at a studio like Fox, and there are even rumors he might choose to live on the East Coast. But the signs sure do point to a berth at Sony.
We might get some clarity on this when we find out what was said in Thursday’s investor meetings. The studio just announced it will retain Bain & Co to find ways to trim $100 million off its books, and it has the Blue Anchor Entertainment co-financing deal in the offing to share risk, which is a very important development. A deal with Robinov and King, who might come with their own money, would give Sony some big pictures in its pipeline, without having to fund them all.
The Sony Pictures moves seem to be a clear response to a rough summer and an attempt to appease the home office and silence vocal critics like minority investor Daniel Loeb. Pascal and Lynton will be able to show that they will still be swinging for the fences, but won’t be alone at the plate if they strike out. And in the current fiscal climate, it is better to share revenue in a win than have to take the whole hit with a pricey flop.
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Sony weathered a rough summer with the under-performers White House Down with Roland Emmerich, Channing Tatum and Jamie Foxx, and After Earth with M. Night Shyamalan directing Will and Jaden Smith. The studio has regained some positive momentum with Captain Phillips and Cloudy With A Chance Of Meatballs 2, but it is clear that it was stung by Loeb’s public characterization of Pascal and Lynton as free spenders who generated seismic flops. While Loeb was then rebuked by George Clooney — who told Deadline that hedge fund guys like this only spread fear in Hollywood and that any studio head would have been on proven summer hit makers Smith and Emmerich–the sharp criticism seems to have prompted Sony to make some major changes in its talent-friendly management style.
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As the studio moves forward with event films to go with its Amazing Spider-Man and James Bond franchises, it will now have a partner to share its risk by locking in a slate co-financing deal with Blue Anchor. While Robinov is in the nascent stages of investor conversations, Blue Anchor Entertainment principals LaViolette and Singer have been putting together capital for more than a year and had it locked when they flirted with other studios before locking in Sony. They give the studio $400 million in equity and a $350 million Bank of America facility that should help cover its slates for the next three or four years as that money is fortified by recycled proceeds. That gives Sony a cushion as it goes forward with potential franchises that include reboots of Ghostbusters (the studio internally is considering Jonah Hill and Emma Stone, but no offers have been made), and Men In Black, which is being pondered potentially without Will Smith. That should make Loeb and other institutional investors happy, as well as the board in Japan, which I’m told encouraged Pascal and Lynton to find a co-fi deal.
As a longtime partner in top-tier law firm Bloom Hergott, LaViolette has repped top talent, and not many know more about making a deal. Singer, a producer of big-ticket films like Courage Under Fire and Dante’s Peak, briefly served as a Universal exec, has remade himself as a numbers specialist. Their experience makes this a strong alliance on paper as Sony attempts to change the narrative of its film division. Like studios including Fox, Sony is working on slates for 2015 and beyond that favor brands and global-minded event pictures aimed at an international audience, the fastest-growing segment of the business each year. Those pictures tend to cost a lot of money.
Robinov could be Sony’s X factor in that equation. Landing him and King would allow Sony to put big pictures in its pipeline without necessarily having to pay for them. Other than the MIB and Amazing Spider-Man films, Sony doesn’t really make movies that cost more than $200 million. If the backers of Robinov and King are paying for those kinds of films, or at least half the cost, it will bolster Sony’s position when the studio negotiates pay TV deals for both domestic and international, the latter of which is growing in importance each year. All this is based on the assumption that King won’t sell off rights and that Sony distributes worldwide. The other carrot here is Robinov’s superb filmmaker relationships with the likes of Christopher Nolan, Ben Affleck, Zack Snyder and Alfonso Cuaron. In the case of the latter, many feel Gravity wouldn’t have gotten made without Robinov’s advocacy. He also championed Nolan’s films including Inception, which seemed risky on paper. If Robinov sways Nolan, Cuaron and others to make some movies at Sony, that could really shake up the landscape. Any criticism of Pascal and Lynton for making high-priced dramas would lessen when risk on inevitable disappointments is shared.
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