More than 25 bidders are expected to submit offers to buy pieces of the bankrupt Relativity Media by the deadline this Friday, individuals with knowledge of the process told TheWrap.
Tom Forman’s TV unit, the company’s strongest division, is expected to draw offers in the $100 million range, close to its revenues for 2014. The vast majority of the bids are expected to be for the TV division, with some for the film division or those two units combined, the individuals said. There almost no new bids expected for the entire company.
Founder Ryan Kavanaugh is also expected to be among bidders for the company.
More than 25 have qualified for the process, and thus are expected to bid.
Relativity’s chief restructuring officer Brian Kushner (pictured above right) told senior managers in a call on Monday that there were 23 bidders thus far with another four expected. He did not detail their identities.
None of the submissions is expected to approach the $250 million stalking-horse bid offered by a group of senior lenders — led by Anchorage Capital, Falcon Investments and Luxor Capital — for all of the company’s assets. That may complicate the resolution of the situation.
Prospective buyers have been traipsing in and out of Relativity’s Beverly Hills office and meeting with the studio’s executives since the company filed for bankruptcy on July 30. Kavanaugh has kept his distance, working from his own Santa Monica office, as Kushner has made most of the major decisions at the company’s headquarters.
But insiders told TheWrap that Kushner has clashed with the existing management over his handling of the sale, upsetting Relativity board members by downplaying potential assets such as China, India, Branding and Digital, as well as the company’s minority stakes in the Sports and Education divisions.
“What he was supposed to sell was the company as whole,” said one frustrated insider executive. “That’s not what he’s doing. He’s selling film and TV. And the lenders are frustrated.”
Asked about his relationship with the board of directors, which includes Kavanaugh, top executive Tucker Tooley, Ron Burkle, Rafe Fogel, Jim Wiatt and others, Kushner told TheWrap: “This is going very similarly to how it goes in previous situations. There are times when we have disagreements, and times when we have agreement.”
Meanwhile, last week U.S. Bankruptcy Court Judge Michael Wiles instructed Kushner to relinquish decision-making about spending to the Relativity board.
“That [provision] needs to be deleted in its entirety,” Wiles said in a court order. “I am not going to give a chief restructuring officer the power of a trustee or a veto power over expenditures that the board of directors might decide are approved.”
That decision may be cold comfort to Relativity board members and Kavanaugh himself, coming just days before the close of bidding and thus too late to make much difference. One insider told TheWrap that the board might have chosen to lay off fewer employees, or proceed with movie releases, if spending had been in their discretion.
A representative for Relativity said that the board had final authority over expenditures “all along.”
The movies on Relativity’s slate have either been offloaded to other distributors, or are in limbo, such as “Masterminds” starring Kristen Wiig and Zach Galifianakis which was supposed to come out in October.
Some board members were said to be upset when Kushner disbanded the fashion department in recent days, while choosing not to consider a bid for its sale to a buyer for several million dollars.
The potential buyer, Colbeck Capital, instead hired former Relativity employees to start its own fashion vertical, according to an individual with knowledge of the dispute.
An individual close to the restructuring disputed the account and said the offer was flimsy and “would not move the needle,” with half of the offered price to be in provided in debt forgivenness.
A pro forma of the studio’s financial performance obtained by TheWrap suggested that the TV division is by far the most profitable at the company. According to documents filed with the court, the TV unit — with a payroll of just 24 full- and part-time employees, less than 8 percent of the company’s total staff of 350 — generated nearly 20 percent of the company’s total revenues.
Relativity reported $346.3 million in revenues from its feature films for 2014, and another $96.6 million from its leaner TV division.
Tellingly, no employees have been laid off from the TV division, whose scripted drama “Limitless” premieres on Tuesday on CBS.
Relativity Television has more than 75 projects in active production at over 35 different networks, including 29 series and more than 46 pilots and presentations, according to the company. The division also has over 100 projects in development that they’re actively pitching to both broadcast and cable.
Other series currently airing include “Home Free” (Fox), “Catfish: The TV Show” (MTV) and “The Woodsmen” (History).