Ryan Kavanaugh, the founder of Relativity Media, is telling people close to him he will try to reposition the troubled studio as an Internet play, The Post has learned.
The repositioning comes as the troubled Hollywood studio nears the June 29 do-or-die day to pay off $300 million in debt, sources said.
Reshaping — and selling investors on the possibility of such a digital transition — could be enticing for Kavanaugh because its would value Relativity at a much higher price, the sources said.
If seen as a Netflix-in-the-making rather than an old-school movie studio, it could carry a much higher value multiple.
Netflix, for example, a digital studio that Relativity could be reshaped to look more like, is valued at 173 times earnings.
By comparison, indie studio Lions Gate commands a much lower price-to-earnings ratio of 30.
A Relativity Media spokesman said while “the company is exploring several options, this is not one which we are pursuing.”
The studio’s debt was due May 31, but it has a 30-day grace period to come up with a solution, sources said.
The studio, home to “Limitless,” “Oculus” and”The Lazarus Effect,” has retained Blackstone to lead a financial restructuring effort, The Post reported exclusively earlier this month.
It also hired FTI Consulting to examine its books and rekindle a longstanding relationship with a Jones Day legal team that specializes in complex re-organizations, The Post has reported.
The privately held Relativity, which has a negative cash flow, sources said, is reportedly in discussions with a “white knight” capable of providing a capital infusion big enough to restore the company’s debt-laden balance sheet.
Kavanaugh, long a student of Netflix founder Reed Hastings, signed a streaming deal with the over-the-top operator five years ago.
Although that deal isn’t expected to be renewed when it expires as early as 2018 — mostly because Relativity fell down on delivering content, sources said — Kavanaugh’s interest in the Internet as a platform has never faltered.
Last year, when Disney secured a deal with Maker Studios and its 55,000 YouTube channels for $500 million — and up to $450 million in added incentives — Relativity countered with an 11th-hour bid of $1.1 billion.
Relativity was undeterred even after Maker spurned its offer, proclaiming in a press release it would continue to pursue opportunities “that align with our strategy to accelerate digital content creation and distribution.”
Since then, sources close to the company have floated the idea of “RelaTV” as a Relativity-owned OTT platform that would stream all movies, TV shows and digital video created by the studio.
Now, though, Relativity must deal with a conflict between debt holders that want to keep the studio solvent and at least one that would like to see it sold and merged into Metro-Goldwyn-Meyer.
Anchorage Capital, a private-equity firm focused on special-situation investments, controls MGM with an equity interest of 28 percent. It’s also a major Relativity debt holder that, sources said, has indicated its indifference to the studio’s bankruptcy — especially if it would allow MGM to buy Relativity on the cheap.