Sale of Relativity Media's Television Unit Closes

Wednesday, Oct 21, 2015

The sale of Relativity Media LLC's television unit closed Tuesday, freeing its leaders from the "distraction" of bankruptcy.

Tom Forman, chief executive of Relativity Television, said the studio behind MTV's "Catfish" and other shows is poised for "supercharged" growth now that it has been spun off from the bankrupt Relativity Media via a sale to a group of hedge funds.

"The best thing for this company, for my team, for the shows we make, is to be as independent as possible," Mr. Forman told The Wall Street Journal Tuesday.

To complete the separation, Mr. Forman says he also plans to rebrand the business.

"This is a new company with a new future ahead of it," he said. "It deserves a new name."

‎Relativity Media filed for chapter 11 protection in July, on the heels of a string of box office flops and a mounting debt load that had reached $1.2 billion.

But the TV studio was widely considered the most attractive of Relativity's assets when, after filing for bankruptcy, the company announced it was putting itself on the auction block.

The court-supervised auction failed to attract an offer for the company as a whole, instead yielding bids to split it. Investors led by Ryan Kavanaugh, Relativity Media's founder and chief executive, are expected to buy back control of the remaining businesses, including its film studio, although that remains subject to bankruptcy-court approval. A group of Relativity Media's senior lenders bought the TV studio out of bankruptcy, which the court has already blessed.

The lenders—hedge funds Anchorage Capital Group LLC, Falcon Investment Advisors LLC and Luxor Capital Group LP—agreed to forgive $125 million in debt for the business and to pump in $75 million of fresh capital into the studio. The lenders are owed a total of about $366 million plus interest, court papers show.

Mr. Forman, a former CBS documentarian and the creator and producer of the Emmy-winning "Extreme Makeover: Home Edition," and Andrew Marcus, Relativity Television's existing president and chief operating officer, agreed to stay on board as part of the deal.

Messrs. Forman and Marcus say they and their team have been working steadily to develop and turn out both scripted and unscripted programming despite the bankruptcy. "Catfish" is among the TV studio's hits and part of its reality programming. Its scripted show "Limitless," based on Relativity's 2011 film of the same name, premiered on CBS last month.

"The silver lining to the bankruptcy cloud, is that it gave us time to think," Mr. Forman said. "We're really excited to take to our network partners what we've been working on all summer, when we weren't focused on corporate bankruptcy."

In particular, Mr. Forman said he has been focused on programming that has potential in markets beyond U.S. borders.

"The future is big broadcast formats that can translate internationally," he said.

Other News