Big Firms Back Ex-Disney Studio Chief’s Venture

Former Walt Disney Studios chief Joe Roth has secured $250 million in equity financing for his new independent movie and new-media venture, Revolution Studios, from major entertainment firms Sony Pictures, pay-TV giant Starz Encore Group and Fox Entertainment Group.

Starz Encore is the largest investor, putting in $150 million for domestic pay-television rights. This is the first investment by Starz Encore and its parent, Liberty Media Corp., which is controlled by John Malone, in a Hollywood production company.

Sony, which will distribute Roth’s movies domestically and in most international markets, is kicking in $75 million.

Fox is investing $25 million for broadcast, cable and domestic TV syndication rights.

Combined, Sony, Encore and Fox will own 25% of the new company, and Roth will have about 65%.

While there’s nothing in writing, and although both sides downplay the possibility, the Sony arrangement positions Roth to eventually take over the studio from Chairman John Calley.

Roth has an agreement with Disney prohibiting him from taking another studio chief job for another 18 months. Roth did not rule out the possibility but said his commitment for now is to “build Revolution into a terrific company,” adding that it is his “sole aspiration.”

Since leaving Disney four months ago, Roth has been raising money and putting together the pieces of his new enterprise. He is close to securing bank financing, which will probably come from Chase Manhattan Bank, and be somewhere in the neighborhood of $300 million to $500 million.

Roth has brought in two of his former Disney colleagues, production head Todd Garner and business executive Rob Moore, to help run the company and as minority partners. Sources estimate their combined stake at slightly less than 10%. Roth is also known to be courting another former colleague, 20th Century Fox veteran Tom Sherak, who is still under contract, to run marketing and distribution. He would also be made a minority partner.

Also getting a small percentage of the company is the Century City law firm Ziffren, Brittenham, Branca and Fisher, which took the lead in negotiating the deals for Roth. Former Sony Pictures Chairman Alan Levine, who recently formed an affiliation with the firm, was one of the architects of the deal.

Revolution plans to produce at least 36 films in the next six years and will own all the copyrights. Sony will finance more than 40% of the films costs and put up all the prints and advertising money.

Sony will release the movies theatrically and in home video in North America and will handle distribution in all media overseas with the exception of Germany and Japan where the company has already sold off pay-TV and home-video rights. It has such output deals with Senator Films in Germany and Toho-Towa in Japan, where Pony Canyon will distribute home video.

Starz Encore gets domestic pay-TV rights and use of the films on its 12-channel Super Pak of digital, commercial-free movie channels as well as future video-on-demand rights.

The deal gives Fox the unique flexibility to choose whether it wants to run Roth’s films first on its Fox network, cable channels such as FX or in syndication on its Fox stations. Fox, which will get Roth’s movies immediately after the pay-TV run, will put up a pre-negotiated several-million-dollar minimum guarantee for each movie as an advance against the box office.

Toho-Towa and Senator Films are on the hook for a combined 20% to 25% of the budgets for each film made by Revolution.

As previously reported, Roth has also made two investments in the Internet: a controlling interest in MediaTrip.com, a site to promote movies and develop online comedy properties for offline exploitation in movies and television.

Separate from Revolution, Roth is in partnership with former Artisan marketing chief John Hegeman on a horror, sci-fi fantasy Web site called Distant Corners.

Roth said that this fall, all of Revolution’s divisions, including MediaTrip and Distant Corners Entertainment Group (totaling more than 100 employees), will all be housed under one roof in 60,000 square feet of new office space that is currently being built out at the Lantana Center in Santa Monica where his company is presently based.