CEO: Relativity Media to exceed $2B in revenue

[September 22, 2010]  LOS ANGELES (AP) -- Privately held film financier Relativity Media will bring in more than $2 billion in revenue for the first time this year, its CEO Ryan Kavanaugh said Tuesday.

The news comes as major movie studios are slashing costs and producing fewer movies as the industry is buffeted by declines in DVD revenues.

The projection would also make the company bigger by revenue than Lions Gate Entertainment Corp., a publicly traded company that posted $1.58 billion in revenue in the year to March and that is often referred to as a "mini" major studio. Major Hollywood studios are much larger, with The Walt Disney Co.'s studio posting over $6 billion in revenue last fiscal year and Time Warner Inc.'s Warner Bros. more than $11 billion.

Kavanaugh told a conference hosted by media and entertainment news website TheWrap that the company's adjusted earnings will be four to five times greater than in 2009, adding that the company was "just above break even" last year. It has co-financed such prominent films as Universal Picture's "Robin Hood," which has grossed more than $311 million worldwide.

The CEO said later in an interview that Relativity has had its books audited carefully in preparation for a possible public offering of stock, although he said there was no set date for a stock sale.

"We're not in any rush," he said. "We really want to show that we can distribute and market a film like a major studio."

He also cautioned that in the event of a stock offering, some of the company's segments might not be available to public investors.

Relativity, backed by private equity investor Elliott Management, in July bought the distribution and marketing arm of Overture Films from Liberty Media Corp., taking on about 45 people. With the ability to distribute its own films, Relativity is on track to be involved in the release of around 30 movies next year.

Kavanaugh said the company aims to make 15 to 18 movies a year on its own and co-finance another eight to 12 with its studio partners, NBC Universal's Universal Pictures and Sony Corp.'s Sony Pictures. Its co-financing deals with them last through 2015 and 2012 respectively.

[Associated Press; By RYAN NAKASHIMA]

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