Beloved film producer Village Roadshow Entertainment has filed for Chapter 11 bankruptcy protection, citing a failed partnership with Warner Bros and a costly independent film venture as major contributors to its financial woes.
The Matrix film producer, Village Roadshow Entertainment, has filed for Chapter 11 bankruptcy protection in the US, citing a legal battle with ‘Warner Bros’ and a failed independent film production venture as major contributors to its financial woes.
Village Roadshow Entertainment is a leading global 'entertainment' company that specializes in film distribution, cinema operations, and theme park attractions.
With a presence in over 20 countries, the company operates some of the most iconic AMC Theatres chain.
Village Roadshow also produces and distributes films, with notable titles such as 'The Matrix' and 'Pirates of the Caribbean' .
The company's expertise spans film production, distribution, and exhibition, making it a key player in the global entertainment industry.
The Root of the Problem: A Failed Partnership with Warner Bros
A long-standing partnership between Village Roadshow Entertainment Group and ‘Warner Bros’ ended on sour notes after the release of The Matrix Resurrections on HBO Max in December 2021. Village Roadshow complained that Warner Bros’ pivot away from an exclusive theatrical release had destroyed the value of a key franchise.
A Costly Independent Film Venture
The company’s attempt to launch an independent film production venture, which began in 2018, proved costly and unprofitable. Despite investing heavily in development costs, none of the films or television series produced as part of this endeavour delivered any profits.
The Impact of Streaming on the Entertainment Industry
The shift to streaming has upended once-vibrant businesses like Village Roadshow‘s. The company’s assets are worth an estimated $100 million to $500 million, but its debts exceed $500 million, with creditors including Kirkland & Ellis and the Writers Guild of America West.
Streaming services have revolutionized the way people consume entertainment content.
According to a report, streaming accounted for 32% of all TV watching in the US in 2020.
The rise of platforms like Netflix, Hulu, and Amazon Prime has led to a significant shift from traditional cable TV.
This shift is expected to continue, with an estimated 50% of households subscribing to at least one streaming service by 2025.
A Decline in Box Office Receipts
Since its founding in 1997, Village Roadshow has co-produced and co-financed over 100 movies that have generated more than $19 billion in worldwide box office receipts. However, the company’s fortunes began to decline with the disruption caused by the COVID-19 pandemic, the 2023 writers’ and actors’ strikes, and major entertainment companies’ embrace of streaming.
A Lasting Dispute with Warner Bros
The legal battle between Village Roadshow and Warner Bros remains unresolved in arbitration, despite over three years of negotiations. The company has spent more than $18 million in legal fees to resolve the dispute, which remain unpaid.
A Reduced Workforce
In an effort to slash costs, Village Roadshow reduced its workforce from 45 employees in the US and Melbourne to fewer than a dozen employees. As of this month, the company’s monthly overhead is about $300,000.
The Road Ahead
Village Roadshow‘s bankruptcy filing was designed to facilitate ‘orderly sales of the debtor’s assets.’ The company proposes to sell its extensive film library for $365m (£281m) in an effort to mitigate some of its financial problems.
