Chapter 274: Relativity Media

Pirates of the Caribbean: Dead Man's Chest grossed over $400 million in North America and more than $1 billion worldwide, making it the biggest winner of 2006.

"You are not getting up?" Keira Knightley patted Charles Capet, who was lying on top of her, on the bed in the Saint Monica villa's bedroom.

"Phew," Charles rolled over and exhaled, looking a bit exhausted.

Keira Knightley hugged Charles, her slender fingers tracing his body. "You've seen the edited version of Atonement, right? What do you think?"

"It's somewhat like your previous film, Pride & Prejudice, but it's a crime love story. It's pretty good, considering the novel Atonement has a broad audience." Of course, the audience for Atonement can't compare to that of Jane Austen's Pride & Prejudice.

"But having you, the hottest British actress right now, starring in it, the expectations for Atonement are still high." Charles said, pinching Keira Knightley's A-cup.

Keira Knightley laughed, "Oh, weren't you just saying my chest is small, and now you're feeling it?"

"Because it's enough, just right," Charles said as he kissed the girl again.

"Alright, let's rest early. I do have work here in Los Angeles," Keira Knightley had only flown for a few hours and then went crazy with Charles on the bed several times, so she was very tired.

The next day, Charles didn't go to the office but enjoyed rest time with Keira Knightley.

...

At the headquarters of Relativity Media in West Hollywood, Los Angeles, Chairman Ryan Kavanaugh and President Michael Joe were happily celebrating.

Paul Singer's Elliott Management Corporation had agreed to inject $1 billion into Relativity Media, becoming its biggest financial backer.

"Elliott Fund, run by Paul Singer, is a vulture hedge fund. If we don't deliver results in the future, he'll definitely withdraw his investment!"

When it came to movies, Michael Joe was clearly more professional than Ryan Kavanaugh.

Ryan Kavanaugh nodded, "But making movies is a long-term investment. It can take one or two years at the shortest, and three to five years at the longest. We're currently using data analysis models to establish our movie investment projects, focusing on commercial potential."

Moreover, the various hedge fund investors from Wall Street include pension funds, sovereign wealth funds, university endowments, charitable organizations, mother funds, insurance companies, and high-net-worth individuals and family offices.

Ryan Kavanaugh himself was experienced in running Wall Street investment funds and had a fair amount of knowledge about fund operations.

"Since Relativity Media is also venturing into movie production and distribution, we need to seek partners as we currently lack experience." As Ryan Kavanaugh's deputy, Michael Joe was well aware of the risks associated with movie investments.

"We have invested in Sony and Universal's slate deals, but we ultimately have little say in production and distribution." Ryan Kavanaugh's Relativity Media engaged in deals with Sony and Universal mainly because of the support from Wall Street financiers behind them.

Ambition, of course, followed. "Next year, we need to have movies we control ourselves, with distribution handled by other partners, but we need to get involved in production to lay the groundwork for our future independent production and distribution of movies."

"You see it too, the fastest-growing company in Hollywood right now is Capet Pictures. Their movies have basically never failed." Ryan Kavanaugh also looked enviously at Capet Pictures.

"Unfortunately, Capet Pictures doesn't need to worry about financing. Banks and personal funds willingly give them money!"

Michael Joe spread his hands helplessly, "There's nothing we can do about it. Capet Pictures has completely surpassed independent studios like Lionsgate and Summit. As long as they gross over $200 million in North America, they're practically the seventh major studio in Hollywood.

You can see it, Capet Pictures will definitely be in the top five this year, with over a 10% share of the North American market!"

Ryan Kavanaugh sighed, "The North American market is still their turf. We need to focus on international markets now."

"We could also collaborate more with independent film production companies. Filmmaker-director-actor-established indie film companies also offer excellent scripts and creative ideas!" Michael Joe reminded again.

"Remaking the 1975 Death Race 2000 originally a Paramount project produced by Cruise/Wagner Productions. Tom Cruise was unhappy with the script and didn't want to play the lead. Last year, Paramount ended their relationship with Tom Cruise. Now Universal has acquired the project, and Universal said that if we invest, the project can start immediately!"

Ryan Kavanaugh nodded, "I've read the script. It's actually not bad, but no need to make it a big-budget film. An R-rated action movie will do."

In recent years, the emergence of investment slate movie companies like Relativity Media, Legendary Entertainment, and Dune Entertainment provided Hollywood with a continuous flow of capital.

Most of this capital still flowed to the six major studios. However, independent distributors also had their financing channels.

Apart from Lionsgate being a public company, companies like Capet Pictures, Summit Entertainment, Criterion Collection, and the newly established Weinstein Company by the Weinstein brothers all had support from banks and funds.

After all, for Wall Street, anything could be turned into financial derivatives to be packaged.

If mortgage-backed securities could exist, so could film slate investments. Film investment companies like Relativity Media and Legendary Entertainment secured financing from Wall Street by packaging film slates.

The booming real estate market in recent years drew substantial Wall Street capital into Hollywood, allowing film companies to invest heavily in blockbuster production and wave gigantic checks to attract big stars.

This drove up not only production costs but also marketing expenses, with budgets of $200-300 million gambled on $1 billion returns being a common practice among major studios.

Struggling indie studios found it hard to compete with the Big Six in Hollywood; were it not for the meteoric rise of Capet Pictures, the dominance of the Big Six would have been even more terrifying.

So, could Capet Pictures still be considered an indie film company with its current model?

*****

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