Netflix Attempt to End Relativity Deal Dismissed in Bankruptcy Court (Exclusive)

Courtroom showdown between streaming giant and studio comes to a close, TheWrap has learned

Last Updated: April 21, 2016 @ 7:00 PM

The contentious bankruptcy court battle between Relativity Studios and Netflix is over.

The streaming giant’s legal bid to end Relativity’s lucrative ongoing output deal was dismissed in New York Bankruptcy Court, according to documents obtained by TheWrap. The filings were disclosed on Thursday.

Netflix had hoped to void the arrangement that offered Ryan Kavanaugh‘s company generous licensing fees for streaming its movies exclusively on the platform.

Relativity bankruptcy judge Michael Wiles ruled in February that the arrangement was still valid despite the studio’s immersion in the Chapter 11 process. Netflix filed an appeal, but the Thursday document said the motion was voluntarily dismissed.

Tensions between Relativity chairman and CEO Kavanaugh and Netflix chief content officer Ted Sarandos exploded in late January, when Kavanaugh accused Sarandos of using bankruptcy as shield to void the otherwise solid deal.

“Sleeze [sic] move,” Kavanaugh said in a Jan. 22 email to Sarandos obtained by TheWrap. “Seriously sleezy [sic] even for you guys.”

The basis of the Netflix argument was that Relativity failed to deliver a certain number of films, likely the result of the financial mess that led to bankruptcy.

Relativity’s Netflix output deal is important to Relativity’s ongoing efforts to relaunch its business, TheWrap previously reported. It was signed when Netflix desperately needed films and therefore contained unusually favorable terms that provided Relativity guaranteed revenue based on a percentage of each film’s box office gross.

Netflix has paid Relativity a reported $283 million since 2010.

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