Why Warner Bros. Was So Willing to Split With Brett Ratner

“There’s no way they can close their eyes and go back to business,” one analyst tells TheWrap

Now that Warner Bros. is severing its ties to Brett Ratner and his RatPac Entertainment in the wake of sexual misconduct allegations against the “Rush Hour” filmmaker, the tough part is working out the details of that separation.

That’s particularly true of the $450 million co-financing deal that has underwritten much of the studio’s film slate since 2013.

Barry Sine, a Wall Street analyst at Drexel Hamilton, said that the studio would be able to absorb the impact of unwinding the deal, which was expected to end in March 2018. “If they part ways, they’ll survive,” he said of Warner Bros. “‘Justice League’ is ready for distribution, and the company has a deep slate of talent to step in on future productions.”

According to an individual with knowledge of the situation, the studio still plans to release five more films that RatPac helped to finance, including this month’s “Justice League” and next year’s Steven Spielberg film “Ready Player One.”

But Ratner will no longer have studio space on Warner Bros.’ Burbank lot and RatPac’s first-look deal with the studio, which recently expired, will not be renewed, the individual said. The filmmaker has also been removed as a producer of “The Goldfinch,” an adaptation of Donna Tartt’s best-selling novel that was his only active project at the studio.

To several analysts, Warner Bros. had little choice but to cut ties with Ratner following the Los Angeles Times expose on Wednesday in which six women, including actresses Olivia Munn and Natasha Henstridge, accused the producer of sexual harassment or assault. (Ratner’s attorney Marty Singer has denied all allegations.)

“There’s no way they can close their eyes and go back to business,” Ross Gerber, president and CEO of wealth and investment management firm Gerber Kawasaki, told TheWrap. “The bigger issue for them is money: How do we exercise ourselves out of this deal and how do we separate ourselves from what makes us look bad?”

While the studio has made no decision about renewing its co-financing deal with Ratner, there’s no denying that RatPac-Dune has been one of the biggest financiers of Warner Bros. and New Line films, underwriting such hits as “Gravity,” “The LEGO Movie,” Batman v Superman: Dawn of Justice,” “The Conjuring 2,” “Wonder Woman,” “Dunkirk” and “It.”

This year, films co-produced by RatPac have accounted for 54 percent of Warner Bros.’ $1.76 billion in domestic revenue at the box office. When films financed by RatPac with New Line are included, that figure increases to 82.8 percent, or $1.46 billion. The only 2017 WB release that grossed over $100 million domestic that was not financed by RatPac is “Kong: Skull Island,” which grossed $168 million.

“My assumption is that they won’t finance any future movies, whatever they’ve spent, they’ve spent and they’ll just write it off,” Gerber said.

Analysts also dismissed the idea that the negative publicity surrounding Ratner and his financial ties to the studio could negatively impact AT&T’s planned $85 billion acquisition of the studio’s parent company, Time Warner, which is expected to be completed by the end of the year.

“AT&T and Time Warner is going to be such a large entity that I don’t think any single producer is going to have a material impact,” Sine said. “Time Warner seems to be handling recent industry issues well, and we expect that AT&T will give them wide leeway to continue to do so post-closing.”

“They are buying it for CNN and HBO,” Gerber added. “But what someone might want to be concerned about is how the movie industry is dying. This could be a bullet through a heart as to how we go to the movies on a Friday night.”

For Warner Bros., the optics of maintaining a connection to Ratner were unsustainable after recent accusations of sexual misconduct led to the very public ousters of The Weinstein Company CEO Harvey Weinstein and Amazon Studios head Roy Price.

According to the Associated Press, Warner was the only major Hollywood studio to release a statement about its sexual harassment policies in the wake of the Harvey Weinstein accusations.

“Warner Bros. says harassment and retaliation are not tolerated on its projects and that policies are constantly being reviewed to make improvements and changes as needed,” the studio said. “Warner Bros also requires management level executives to participate in regular training and encourages all employees to report concerns regarding harassment and retaliation.”

For Gerber, the separation of Ratner is a welcome sign of change in an industry that has long turned a blind eye to inappropriate behavior.

“There are a lot of sick people and they should not be in a position of power,” he said. “There are plenty of nice people in Hollywood to replace them with and I think we’re going to see a change.”