Benjamin Wallace looks at Ryan Kavanaugh and the implosion of Relativity:
Not yet 30 when he founded Relativity Media in 2004, he very quickly became not only a power player in Hollywood but the man who might just save it. With a dwindling number of studios putting out ever fewer movies, other than ones featuring name-brand superheroes, Kavanaugh became first a studio financier and then a fresh-faced buyer of textured, mid-budget films. To bankers, Kavanaugh appeared to have cracked the code, having come up with a way to forecast a famously unpredictable business by replacing the vagaries of intuition with the certainties of math.
As we’ve discussed on the podcast, anyone who claims to have developed a mathematical system for picking hits is either delusional or willfully deceptive. Data analysis relies on numbers, and it’s easy to cherry-pick:
Relativity actually did look at whether to finance that Untouchables prequel, Capone Rising, with Nicolas Cage and Gerard Butler attached to star and Brian De Palma to direct. The company ended up passing, but someone close to the financial modeling recalls doing a double take at the rosiness of the Relativity algorithm’s prediction. “I read the input log for it. I thought: What’s missing? I said, ‘Where’s Snake Eyes?’” — a Cage flop. “They said, ‘Uh, we’re leaving that out.’”
What Kavanaugh was selling wasn’t an algorithm as much as a narrative: you can trust me, because look at these other people who trust me.
Say you’re a Chinese billionaire looking to invest in Hollywood. Meeting Kavanaugh, it was easy to see how successful he was. He had his name on lots of movies, some of them award-winners. He had celebrity friends and a private jet. He made huge donations to charities. And there were glowing articles portraying him as a boy-wonder maverick shaking up the system.
The thing is, almost everyone in town knew it couldn’t last. When you were selling a spec script, you wanted Relativity to bid, but you didn’t want them to win. You wanted the movie to get made, and everyone knew the clock was ticking.
Relativity filed for bankruptcy in July.
To Hollywood’s more sophisticated power players, Relativity’s declaration of bankruptcy was less intriguing than how long Kavanaugh had been able to stave it off, reeling in money over and over again despite mountains of evidence that the product he was selling was not what he claimed it to be. “You have to give him credit for keeping it going as long as he did,” says an old hand at a major talent agency. “The people inside the system were in on the joke.”
I’ve never met Kavanaugh, and as far as I know, he hasn’t been involved in any of my movies. I see him at parties and premieres, and he’s always struck me as an interesting character: bouncing and bold, eager to be at the center of the action.
It’s tempting to dismiss Kavanaugh as an opportunist, but I think that’s unfair. From the very start, Hollywood has depended on dreamers and schemers. Many of our best films exist only because someone was brave or foolish enough to risk money on them — and charismatic enough to keep finding new money when the first batch ran out.
The fall of Relativity makes for good reading, but I wouldn’t mistake it for a cautionary tale. Right now, young upstarts are devising the next way to raise hundreds of millions to make movies. Whoever they are, we need them. We always will.