The Academy can veto a new sponsor of the Hollywood & Highland theater that has been home to the Oscars the past 10 years
Kodak’s bankruptcy has left studios out millions and the landlord for the Oscar theater in the market for a new sponsor.
Since the Academy Awards moved to the Kodak Theater at Hollywood & Highland a decade ago, the 131-year-old company’s name has been synonymous with the Academy Awards.
That could soon change. On Wednesday, the 131-year company asked a U.S. bankruptcy court judge to allow it to get out of its $75 million naming rights deal with the real estate company behind the complex.
If Kodak gets approval to withdraw its sponsorship, CIM Group, the developer of the mall, is free to seek another corporate sponsor. But the motion picture academy's board of governors can veto the choice.
Tom Sherak, the Academy’s president, stressed that making the deal for a new sponsor is up to CIM.
“Let's say they brought in Dell, we probably wouldn't disapprove that," Sherak told TheWrap. "We don't approve, but if it was something that didn't work, we'd disapprove.”
Kodak says that given its recent financial headaches, it can no longer justify the more than $4 million it pays in fees for those naming rights.
“Kodak is proud of its important role in the Entertainment industry, and our long standing relationship with film makers,” Christopher Veronda, a spokesman for Kodak, said in a statement to TheWrap. “Our motion today reflects our commitment to ensure that we are maximizing value for our entertainment customers, creditors and other stakeholders.”
The filing states that Kodak pays a significant annual amount for, among other things, the naming rights related to the Kodak. “The Debtors have evaluated the Contract in consultation with their professional advisors and determined that any benefit related to these rights likely does not exceed or equal the Debtors’ costs associated with the Contract,” it states.
The Academy's Board of Governors is weighing a move to a new venue, but if it does not, it can nix potential sponsors.
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In December, the Academy exercised an option in its 20-year deal with the owner of the Kodak that allows it to consider other venues before deciding whether to recommit to the Kodak for the final 10 years of its contract. If it does not find another location, it can always stay at the theater.
Regardless of what happens with the Oscars, if other corporate christenings are any indication, CIM might even be able to make more money on the naming rights.
For example, Citigroup paid $400 million over 20 years in 2009 to have its name emblazoned above the Mets Stadium in Queens, N.Y. Likewise, Staples shelled out $116 million over the same time frame for rights to the arena where the NBA's Lakers and Clippers play in Los Angeles.
Not that finding a replacement for Kodak will necessarily be easy. CIM has been trying for years to sell the naming rights to the entire Hollywood & Highland complex and has yet to find a buyer. The company did find half a dozen potential sponsors in 2010, but is still continuing to search, according to a report in the Los Angeles Business Journal.
As for Kodak, its Chapter 11 filing has left a number of major entertainment companies with tens of millions of dollars in unpaid bills.
Indeed, the list of Kodak’s unsecured creditors reads like a who’s who of media and technology giants. Kodak owes $16.7 million to Sony, $14.2 million to Warner Bros., $9.3 million to NBC Universal, $6.8 million to Paramount, $4.2 million to Disney, $3 million to Amazon and $12 million to Nokia, according to bankruptcy filings.
Steve Pond and Pamela Chelin contributed to this report