Movie Financier Kavanaugh to Consider Relativity Studio IPO After Deals

July 26 (Bloomberg) - Relativity Media LLC, Hollywood financier Ryan Kavanaugh’s film production company, will consider a public stock offering after striking a deal to add distribution and marketing capabilities.

“Down the road, we’ll be looking at several options, one of which could be a public offering,” Kavanaugh said in an interview, without providing a timetable.

Relativity, based in West Hollywood, California, is acquiring the 45-person marketing and distribution staff of Liberty Media Corp.’s Starz Overture film studio, which is closing. Relativity is financing or producing 10 films in the next year and plans 20 to 30 annually, according to a July 6 statement from the company.

“We now have the capacity to handle a film from inception through each stage of its release in a manner commensurate with a major studio,” said Kavanaugh, whose closely held company finances movies for General Electric Co.’s NBC Universal and Sony Pictures Entertainment.

The Overture deal, which also gave Relativity rights to three unreleased films, follows a July 6 accord to provide films to Netflix Inc., the mail-order and online film rental service. Under the agreement, Relativity bypassed traditional pay TV networks in favor of a new online revenue source.

With partner Elliot Management Corp., a New York-based hedge fund, Kavanaugh has built Relativity’s production after initially starting as a financier. In April 2009, the company signed a multi-year agreement giving Lions Gate Entertainment Corp. rights to distribute as many as five pictures a year.

In 2009, Relativity purchased Rogue Pictures from General Electric’s NBC Universal. The agreement gave Kavanaugh 30 pictures in development, including the comedy “MacGruber.” The film, released in June, had a production budget of $10 million and took in $8.5 million in ticket sales, according to the Internet Movie Database.

To contact the reporter on this story: Ron Grover in Los Angeles at Rgrover5@bloomberg.net;

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