Sony Feeling The Loss Of 'Ghostbusters' Finance Partner

About a month before the remake of Ghostbusters went into production, Sony Pictures Entertainment lost their main financing partner, LSC Film Corp. Sony is being quiet about their losses from the movie this summer and have continued to keep their losses to themselves because of the backing out of their key financing partner. LSC has invested in other Sony movies in the past but has lost money on many of them. This may be one of the reasons they decided to back out and they may have made a good choice considering that the movie only grossed about $229 million around the world.

Initially, LSC had agreed to put up around 25 percent of the movie's budget which included rebates and market spend. SPE put this budget cost around $144 million while other sources put the cost closer to $160 million. If they would have stayed on the project, their financing would have covered around $26 million of the film's $70 million in losses. Tom Rothman, Sony Pictures chairman, was considering whether to pursue legal action against LSC for backing out. However, the studio had concluded that they acted within their rights so Rothman decided not to pursue any legal actions.

Hollywood studios, excluding Disney, is always on the lookout for partnerships to help buffer the cost of financing a project to reduce the risk. Mr. Rothman is known for pursuing a multitude of partners to share risk with on projects. Many executives from other companies do the same and say it is rare for a financing partner to pull out once they have agreed to the project unless there have been significant changes such as a new director or a major change to the financial terms of the film being made.

The LStar deal that runs through 2019 was made during the time that Sony's previous film chief was in charge. Sources say that prior to the release of Ghostbusters, LSC and Sony had already began to revise financial terms to the agreement. It is presumably noted that LSC was trying to sweeten the deal for themselves because they had suffered losses beforehand. However, Sony had instead suggested that the new deal might exclude LSC from participating in any of the studio's animated films. This was a no-go for LSC because their biggest money-maker to date was with the animated film Hotel Transylvania 2 which grossed them $473 million dollars globally. An insider of the company doesn't understand why the studio was trying to drive such a hard bargain with LSC because they had invested in so many unsuccessful movies in the past. The insider also said that they should have given them a little preferential treatment to help make up for previous losses and their willingness to still offer financing for more movies.

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