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Sony, Lone Star end film funding deal with US$50m remaining
[LOS ANGELES] Sony Pictures, the studio behind "Spider-Man: Homecoming," parted ways with film-financing partner LStar Capital, which opted out of a deal to provide as much as $50 million through 2019, according to a person familiar with the matter.
The affiliate of Lone Star Funds won't meet a Monday night deadline to provide funds for "The Emoji Movie," a film set for July 28 release, said two people, who asked not to be identified discussing a private matter. The failure to provide those funds ended the deal. LStar's agreement involved financing films including "Aloha" and "The Brothers Grimsby," many of which fared poorly at the box office.
Sony Pictures is at a crossroads in its effort to recover from a series of flops. The studio recorded a US$1 billion writedown earlier this year due to a collapse in home-entertainment sales. While Sony can fund the films left on its LStar deal by itself, financing partners help bear the burden of risk in the notoriously volatile movie business.
"Lone Star has been a great partner for several years and as anticipated, the deal has concluded - and on a high note," Sony said in a statement. "The decision to part ways was mutual, and won't impact the studio's plans or our strong slate of upcoming films moving forward." Sony and LStar struck their US$200 million deal in 2014 to fund years' worth of films, later extending it to 2019. In addition to "The Emoji Movie," the films remaining under the deal were "Flatliners," a third "Hotel Transylvania," "Peter Rabbit" and faith-based film "The Star." If Sony believes it has a hit on its hands with one of those movies, it now has the option of funding the film itself and reaping more of the profits, according to a person familiar with the studio's thinking. On the other hand, a box-office dud will now hurt the bottom line more unless Sony can find a partner.
The loss of a financial backer puts pressure on Sony studio chief Tom Rothman, who replaced the ousted Amy Pascal in 2014. His attempts to bring success back to the film business have led to duds like "Passengers" and "Billy Lynn's Long Halftime Walk." This year "Life" and "Rough Night" were also box office disappointments.
Investors have been considering bidding for Lone Star's stake in Sony's library, people familiar with the matter said. That would give the buyer access to future revenue from those films, but not necessarily future Sony films, one of the people said.
Most major movie studios, with the exception of Walt Disney Co, share the risks and costs of filmmaking with co-financiers such as Sony's partners Village Roadshow and Media Rights Capital.
The success of "Spider-Man" has lifted Sony from seventh place to sixth this year at the among studios at the domestic box office, according to researcher Box Office Mojo. It has also had success with the smaller-budget heist movie "Baby Driver."