Tuesday’s news about Annapurna shockingly pulling out of two projects –Jay Roach’s untitled Roger Ailes movie and the Jennifer Lopez feature Hustlers — in addition to its head of production Chelsea Barnard exiting, has raised serious questions in Hollywood about the independent studio’s financial livelihood moving forward. Barnard’s departure comes roughly four months after the Megan Ellison-run company lost its CFO Josh Small and President Marc Weinstock at the same time.

“A lot of these headlines about our financial situation are unfounded rumors and speculation, and it’s just business as usual,” said an Annapurna spokesperson.

Deadline sources estimate that ever since Annapurna started up its own marketing-distribution arm in July 2017, in an effort to take control of its own productions, that it has gone through some $200M in overall costs while its slate of five releases since then have combined to earn less than $40M at the domestic box office. Buzz is that Ellison’s father, Oracle co-founder and executive chairman Larry Ellison — who has been financially involved in the studio — is insisting on financial discipline, cutting back on spending while investing more money in an effort to buoy the studio. That was evident in the studio’s unplugging from the Roger Ailes and Hustlers productions.

Christian Bale as Dick Cheney in Adam McKay’s Vice.
Annapurna

Megan Ellison long has been an opulent catalyst for getting auteurs’ prestige passion projects on the screen, driven to a filmmaker’s cause no matter what the spend. That’s essentially the challenge at Annapurna: spending too much money on niche films. Annapurna’s Adam McKay-helmed all-star Dick Cheney movie Vice cost a reported $60M, 114% more than the $28M production price tag for the director’s The Big Short, with analysts saying that Vice will require a break-even in the $60M-plus range after an awards-season push and Christmas theatrical P&A around $35M-plus. Vice‘s production costs largely were covered by foreign presales. McKay’s The Big Short, about the U.S. mortgage crisis, was able to find a mainstream audience — making $133.4M worldwide while winning a screenwriting Oscar win for him and Charles Randolph — but movies about unfavorable presidential administrations have been challenged at the B.O.; Oliver Stone’s Nixon made $13.6M, for example, while his W. made $25.5M stateside.

Annapurna

Sources also point to the overspend on the Jacques Audiard western The Sisters Brothers, a supposed passion project of Barnard’s for which Annapurna apparently shelled out $9M for the domestic rights and has made less than $800K through three weeks at the domestic B.O.. A brighter spot on Annapurna’s schedule was its low-seven-figure acquisition of Boots Riley’s trippy comedy Sorry to Bother You, which sources say eventually will break even for the distributor’s as its highest-grossing title to date with $17.5M.

In addition to Vice opening on December 14, Barry Jenkins’ If Beale Street Could Talk opens on November 30, while the Nicole Kidman cop action film Destroyer hits theaters on December 25. Ellison has the ultimate final say on a project’s greenlight, and we hear that she’s taking the time to re-evaluate and re-assess the company’s situation and increase revenue without sacrificing its reputation for high-quality filmmaker product.

TWC

Megan Ellison’s penchant for highbrow fare is the complete opposite to her brother David Ellison’s flair for $100M-plus four-quad tentpole fare — which, according to financial analysts, has a better chance in its return on investments at the box office. His Skydance Media recently saw its Paramount co-production Mission: Impossible – Fallout become the highest-grossing title in the 22-year-old Tom Cruise franchise with $219.8M domestic, $790.2M worldwide. Commercial fare hasn’t been Megan Ellison’s suit.  Even though she beat Lionsgate for The Terminator franchise rights back in 2011 at $20M price, Megan Ellison later divested herself from the series, with her brother’s Skydance and Paramount taking over future installments. She did serve as an EP on 2015’s Terminator: Genisys, which did not reboot the series as imagined, but David Ellison was able to bring back original Terminator filmmaker James Cameron as a producer for another 2019 iteration with Deadpool‘s Tim Miller at the helm.

Megan’s passionate spending comes with pics like Paul Thomas Anderson’s 2012 title The Master, a drama in which the late Philip Seymour Hoffman portrayed an L. Ron Hubbard type. Before Weinstein took global rights, Universal balked at the film’s $35M budget. Annapurna made the film for $30M-plus and it ultimately fizzled with a global take of $28.2M.

Megan Ellison
Shutterstock

In regards to Annapurna moving away from Roach’s Roger Ailes film — we hear its cost was mushrooming beyond $35M and, given Vice‘s lofty cost versus its subject matter, it was too much of a gamble. For the studio, there was limited overseas appeal for Lorene Scafaria’s Hustlers; it was more financially prudent to see that project leave, with STX snapping it up Tuesday with Constance Wu in advance talks to join as exclusively reported by Deadline.

In the wake of Tuesday’s calamity, Annapurna reportedly is recalibrating itself, with buzz that there will be nominal cuts at the company known for its splashy overhead.

Per Annapurna: It’s still standing and not going anywhere, and there are some outside the company who believe that the studio won’t necessarily be snowed in, just making even fewer films. There is the belief that Ellison is in it for the long haul and not expected to flee Hollywood in the way that other outsider billionaires have — read Tim Headington who took a reported $200M-plus hit following his involvement in GK Films’ losses six years ago from Martin Scorsese’s Hugo, Johnny Depp title The Rum Diary and Angelina Jolie’s In the Land of Blood and Honey. 

MGM

If there’s a terra firma for Annapurna, it’s in its joint venture deal to distribute of MGM’s slate, which includes Creed 2 on November 21, and Fighting With My Family on March 1, The Hustle on May 10, The Addams Family on October 18, 2019, Bond 25 on February 14, 2020, and Legally Blonde 3 on May 8, 2020. A portion of the half-billion evolving credit facility from JPMorgan is relegated to covering the P&A spend on the MGM releases in addition the marketing and distribution department overhead cost at Annapurna. We understand that Annapurna gets a percentage from the box office in addition to sharing P&A with MGM, and Creed 2 could prove to be a winner after the Rocky franchise reboot made over $173M back in 2015 (Warner Bros., which handled global on the first title is only distributing overseas on the sequel).

But what happens if Annapurna truly goes sideways down the road and can’t keep itself afloat? Speculation is that Universal, which has overseas on Bond, could take that pic’s domestic rights, rather than MGM fielding offers from other studios again. That would be the most feasible. It also would come as no big surprise if MGM re-started its own distribution and marketing departments; current Annapurna distribution boss Erik Lomis is a vet of the major studio and has a history overseeing its slate and the Bond films. When reached for comment on Annapurna’s financial situation and the studio’s future commitment with them, MGM provided no comment.

As far as the exorbitant amount of money that Annapurna has gone through, some point to the fact that it’s a start-up company, that it’s building a film library. If there’s parachute for Ellison, it might be selling Annapurna off down the road.

But if the town has any advice for Megan Ellison, it’s to keep Annapurna up and running through 007. That could well be the company’s lifeline.