BREAKING: Legendary Entertainment has its first CEO since Thomas Tull exited after selling his company to Dalian Wanda for $3.5 billion in early 2016. Joshua Grode has taken the reins and will team with Vice Chairman of Worldwide Production Mary Parent to build the company’s future. Grode leaves as partner of the law firm Irell & Manella and co-chair of its Transactions practice who has advised Legendary and other media businesses including A24, Lionsgate, Marvel, Miramax, Summit Entertainment and financial institutions including Bank of America, Comerica Bank, Union Bank, as well as the Academy of Motion Picture Arts and Sciences, where he worked on the financing and construction of the Academy Museum of Motion Pictures.
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Legendary offered Grode the job in late August, but he took his time figuring out if he wanted to make the switch. Legendary courted such heavyweights as Jim Gianopulos for the CEO post before he instead decided to reinvigorate Paramount Pictures. An issue facing any top candidate has been the uncertainty regarding any China-backed company after the government cracked down on money leaving the mainland. The combination of a strengthened Legendary balance sheet, working alongside dynamo creative executive Parent, and an ability to continue being entrepreneurial were the reasons Grode said yes.
“Throughout my legal career, I’ve been one of those lawyers who has been more of a proactive business partner type lawyer versus one who sits back and waits for the deal to get made and writes up the paperwork,” Grode told Deadline. “That started back when we did the Marvel deal. We came up with the idea, working with the executives there; let’s leverage your comic book characters into a financing entity and transform you from a licensing company into a studio. That was an idea that we as lawyers came up with and helped them execute, which is uncommon. Similar to Summit, when everyone said, you can’t build a new studio. We had just finished doing all these producer finance deals and said, of course you can build a studio, with a blank piece of paper. That was myself and Ron Hohauser, now the CFO at Legendary, who came up with the idea to build a new studio and we went out and recruited the executives to fill that role, put the financing together and we really were the instigators in building that.
“When this came up, I’d known the Wanda guys well from the years spent working with them,” Grode said. “I’d gotten to know Mary working with her after Wanda purchased Legendary. Seeing how she approaches this and what she wants to accomplish on the creative side, I thought, this could be another one of those unique opportunities to take advantage of what I see happening in the market. Which is, you have a creative force like Mary, you have the consolidation of our business — if Disney does buy Fox, and all the other changes going on with Time Warner — and I think there is going to be an opening for a company to really focus on delivering and getting very close to the content. Combined with the strength of Wanda being the 800 pound gorilla in China, an increasingly important market, and their willingness to deliver all the resources they own to support what Legendary is going to do in the future? That on the operational side is something unique”
The final decider was financial moves made by Wanda to convert debt into equity and show a liquidity that will help convince Hollywood that the company will be around for a long stay. These moves were assisted by Grode, advising from Irell Manella. The China party congress convened in October signaled a thaw, after which Wanda pulled $1.7 billion in funding out of China for its businesses. The company has put three quarters of a billion dollars on the balance sheet, and converted $500 million of debt into equity, Grode said. This was contrary to a number of other Chinese companies that pulled out of deals, most notably the co-financing arrangement made at Paramount with Huahua Media and Shanghai Film Group that was supposed to bring $1 billion to the studio’s slates over three years.
“The balance sheet was recently improved, and all the debt on the company was converted into equity by Wanda,” Grode said. “They put in close to three quarters of a billion dollars in new capital onto the balance sheet. So you have in Legendary a company that on a financial level is strong than it has ever been in its history. Combine those three things and, when does that happen, where you have a pristine balance sheet, a creative Michael Jordan working at the company, and the resources on a global level in a company small enough where you can effect change. Sounds great.”
Wanda scored a coup by getting Parent to continue as its chief creative executive, but landing a wingman at the CEO level was important to her committing longterm, because she had a key man clause in her contract. Had she taken another job, Wanda would have had little to show for its $3.5 billion acquisition. Parent said her time working alongside Grode when he was advising the company convinced her he would be an ideal CEO, and Grode said he wouldn’t have made the move if Parent wasn’t there.
“The best way to know is to be in the trenches with somebody, where you can judge their commitment and intensity,” Parent said. “Josh had the unique opportunity to be at the center of so many different kinds of deals and companies. Most people who come into these jobs worked at one or two companies their entire career. Because Josh worked at such a high level as a lawyer, he had the insight and the ability to look across all of these different companies and platforms, which is unique. Combine that with somebody who has as intense a work ethic as I do, and to me it became, how do we make this happen? I find people define themselves frankly when things are challenging. His level of integrity and honor and his creative thinking to quickly assess how to tackle problems and opportunities, are unique skill sets. I almost felt it was fated to happen this way and it meant everything to me. This is an environment I feel I can do my best work in, and with the stakes so high right now, you have to make sure the people you’re in the trenches with are able to bring out the best in one another, but also can bring something specific and unique to the table. Josh checked every single one of those boxes.”
Parent said she was excited by such upcoming big scale films that include the Dwayne Johnson-starrer Skyscraper, Godzilla: King of Monsters, Detective Pikachu, Godzilla Vs. Kong, and Dune with Denis Villenueve, as well as the Legendary produced/financed Carne Y Arena, the VR project by Alejandro Gonzalez Inarritu which just received a special Oscar. The TV projects include Lost in Space for Netflix, an adaptation of the Lawrence Wright Pulitzer Prize winning book The Looming Tower about the events that led up to the 9/11 terrorist attack, and Carnival Row, the fantasy noir that stars Orlando Bloom and Cara Delevingne, hatched by Rene Echevarria & Travis Beacham for Amazon.
Around all this, Grode will look for opportunities to expand Legendary’s imprint. It is a case where not being too big leaves a lot of room to grow.
“I get excited, that this company doesn’t have a lot of entanglements, limitations and drag that some of the big media companies have now,” Grode said. “If you turn the clock back ten years, HBO could have said, let’s go over the top, let’s deliver content that way, and you maybe wouldn’t have Netflix. But they really couldn’t do that then, because they were making so much from the MSOs paying them billions of dollars a year. They were never going to walk away from that, but it is a corporate entanglement that prevented them from executing on something they probably should have done, fully noting that hindsight is always 20/20. The benefit of Legendary is, we don’t have that. We’re free to go look at the marketplace with a strong balance sheet and excess cash and the ability to say, ‘boy that looks interesting, maybe that’s something we should do.”
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