Village Roadshow Entertainment has filed for Chapter 11 bankruptcy protection, a dark turn for the once-prolific film financing company that backed the “Joker,” “The Matrix” and “Ocean’s Eleven” movie franchises.
The West Hollywood-based company blamed its ongoing legal battle with longtime partner Warner Bros. for its collapse, according to a Monday filing in U.S. bankruptcy court in Delaware. Village Roadshow also conceded that its ambitious push into producing independent films and television programs before the pandemic was unprofitable, exacerbating its financial woes.
The breach of contract lawsuit against Warner Bros. came after the studio introduced “The Matrix Resurrections” in December 2021 on its HBO Max streaming service the same day the film was released in movie theaters. Village Roadshow complained that the Burbank studio’s pivot away from an exclusive theatrical release had destroyed the value of a key franchise.
Village Roadshow’s predicament is a stark example of how the entertainment industry’s shift to streaming has upended once vibrant businesses.
Since its founding in 1997, Village Roadshow has co-produced and co-financed more than 100 movies that together generated more than $19 billion in worldwide box office receipts, according to court documents.
“A confluence of macro-economic factors have weighed heavily on the company’s balance sheet,” Keith Maib, an executive with Accordion Partners who is serving as chief restructuring officer for the Village Roadshow liquidation, wrote in a declaration.
The disruption caused by the COVID-19 pandemic, the 2023 writers’ and actors’ strikes and major entertainment companies’ embrace of streaming helped crater the company, Maib wrote.
The bankruptcy filing was designed to facilitate “orderly sales of the debtor’s assets,” he said.
Village Roadshow is controlled by Vine Media Opportunities, Falcon Strategic Partners and a Canadian limited partnership, 1397225 Ontario Ltd.
The company said its assets are worth an estimated $100 million to $500 million.
But it has more than 200 creditors and debts of $500 million to $1 billion, according to the filing.
Village Roadshow owes more than $11 million to Kirkland & Ellis in Los Angeles for professional services. Its debt to the Writers Guild of America West tops $1.4 million. (The WGA put Village Roadshow on its strike list in December for nonpayment.)
The filing also shows that Village Roadshow owes Bryan Cranston’s Moonshot Entertainment Inc. $794,000 for development costs and another $250,000 to Sony Pictures Television.
Former Sony executive Steve Mosko, who joined Village Roadshow in 2018 as chief executive, left earlier this year. He had attempted to build Village Roadshow into an independent studio that produced its own movies and television shows.
But the Mosko-led campaign to remake the company into a full-service studio proved costly and untimely.
Village Roadshow put into development 99 feature films, 166 scripted television series and 67 unscripted series. Of those, six movies and seven television series went into production. “No film or television series that was produced was able to create a profit that could sustain the studio business,” Maib wrote.
Village Roadshow’s legal battle with Warner Bros. was the last straw. The company’s dispute against Warner Bros. remains unresolved in arbitration — more then three years after the lawsuit was filed.
In late 2021, Warner Bros. was recalibrating due to the lingering effects of the COVID-19 pandemic. The company, then owned by AT&T, was prioritizing gaining subscribers to support its streaming service over its traditional business of releasing movies to cinemas. That’s when it placed “The Matrix Resurrections” on HBO Max.
Village Roadshow said it has spent more than $18 million in legal fees to try to resolve the Warner Bros. dispute — fees that remain unpaid.
While the firm also worked on movies with Sony Pictures Entertainment and Paramount Pictures, its most valuable assets were produced in conjunction with Warner Bros., including “Mad Max: Fury Road” and “The Lego Movie.” The company co-produced and co-financed 91 films with Warner Bros. by arranging some $4.5 billion in financing.
Village Roadshow’s library assets generate about $50 million a year in revenue, according to Maib’s declaration.
Last year, Village Roadshow engaged Goldman Sachs Group to sell some library assets, but uncertainty caused by the lingering Warner Bros. dispute scuttled the effort.
The company then engaged Sheppard Mullin Richter and Solic Capital Advisors, which came up with a “stalking horse bidder” to buy the assets following the Chapter 11 process, Maib wrote.
A year ago, the company had about 45 employees in the U.S. and Melbourne, Australia. In its move to slash costs, the firm now has fewer than a dozen employees. As of this month, the company’s monthly overhead is about $300,000.
