Megan Ellison's Annapurna Not Expected to Be a Buyer at Toronto Film Market

After a bankruptcy scare and a renegotiated deal with lenders, the indie studio won't be looking for movies at the festival but is planning to produce more homegrown fare.

After escaping a bankruptcy scare and restructuring its debt in late August, Megan Ellison's Annapurna Pictures is moving forward with full steam and is "excited about the path ahead," says chief content officer Sue Naegle.

But a pivot is a near certainty after the company blew through roughly $200 million in revolving credit used to release such box office misfires as Destroyer ($5.6 million globally), The Sisters Brothers ($13.1 million) and the August release Where'd You Go, Bernadette ($7.5 million).

What that evolution looks like remains to be determined. For now, the company will take a breather on acquisitions — both Destroyer and Sisters Brothers were Cannes pickups — and is not planning to buy anything at the upcoming Toronto market. Annapurna is sending four executives to the festival, but Ellison will not be one of them as she was in 2018, when the studio screened three films at TIFF including Barry Jenkins' If Beale Street Could Talk.

Instead, the company will focus on its homegrown fare and plans to be in production on one unnamed title later this year or in the first quarter of 2020. Most important to Ellison, there are no planned layoffs for the staff of 70 (the billionaire heiress has been covering payroll with her own funds and bought the West Hollywood office building that Annapurna rents).

How close was Annapurna to filing for bankruptcy and joining the list of mini-majors like Relativity and Open Road that couldn't cover the hefty overhead that comes with distributing movies? One source called August a "do-or-die moment" for Annapurna, which retained a bankruptcy firm.

The source adds that Ellison's father, Oracle founder Larry Ellison, used the threat of bankruptcy in order to negotiate a favorable 82 cents on the dollar payback deal with Annapurna's lenders. "The bankruptcy option made the banks take him seriously," says the source.

There are no new mandates yet, but Megan Ellison is open to taking some of Annapurna's future titles straight to streaming rather than giving them a traditional theatrical release, a strategy she has largely resisted in the past. But that approach worked on the Coen brothers' The Ballad of Buster Scruggs, which was released by Netflix and was nominated for three Oscars. "Our intention is the same as always — to make great content across film, games, TV and theater," adds Naegle.

Others foresee an inevitable shift. "Megan will have to change her way of doing business," says Creative Wealth Media's Jason Cloth, one of the most active financiers in the indie space, whose producing credits include Joker. "She's got an absolutely fantastic creative eye. Nobody can dispute that. But the economics of making a movie are not such that you can make a top-quality movie at a price where everyone makes money."

This story appeared in the Sept. 4 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.