Relativity, Elliott In Film Fund Spin-Off Deal

Jun 6 2011 | 1:15pm ET

Rumors of the divorce between Relativity Media and Elliott Associates appear to be greatly exaggerated.

The former will invest more in the latter, rather than having its investment bought out. In exchange, Relativity has agreed to spin off its film fund—backed by Elliott for the past three years—to the hedge fund.

"As our core business of developing, producing and distributing our own product has grown to be competitive in size and scope with the majors, this move allows us to focus our energy on that business," Relativity CEO Ryan Kavanaugh said.

The film fund will be managed by Michael Joe, the former Relativity president hired by Elliott last month to lead Elliott Media Investments.

Last week, it was reported that Kavanaugh was seeking a buyer for Elliott's stake in the studio—the hedge fund has invested more than $1 billion in Relativity—but Elliott said it was not planning to sell its piece.

Relativity reportedly has an option to buy Elliott out.

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