Seeking new ways to offset their production risks while holding onto global distribution rights, Sony Pictures Entertainment and UniversalPictures have each signed separate co-financing deals with investors groupsconnected to Relativity Media.

The Los Angeles-based Relativity, which structured a similar $528m dealwith Warner Bros last year, retained Deutsche Bank to raise in excess of $600min overall capital for the latest studio pacts.

The financial package provides discrete and separate funds forboth Sony Pictures Entertainment and Universal Pictures. Relativity noted thatthis deal, to be known as Gun Hill Road, LLC, represents the first time thattwo studios will receive funds from the same funding source.

The combined arrangement, with Sony Pictures and Universal, willprovide production funding for a total of 18 films in various stages ofproduction and release. These films will be co-financed through a blend ofprivate equity, provided by Relativity and its investment partners, togetherwith senior debt entirely underwritten by Deutsche Bank.

Relativity says it handpicked each film to come under this new funding programme based upon the strength of the individual film package, including cast, director, production teams and studio management. Therespective studios will retain creative control as well as worldwidedistribution of their feature films.

Of the 18 films co-financed with Relativity's investment group,eleven are due to released by Columbia Pictures over the next 15 months.

Under that particular deal, Sony will receive in excess of $400min co-financing from a vehicle known as GH One LLC. In return for theinvestment, the financial partners will receive a share of profits generated bythe 11-picture slate, whose titles are not being disclosed.

The other seven films will come from Universal, under a separate$200m deal in which Relativity and its investment partners will provide 50% ofthe budget in exchange for an equity stake in the pictures.

Those seven Universal productions are Doom, Nanny McPhee, The Inside Man, The Fast And The Furious: Tokyo Drift, TheKingdom, Smokin' Aces and the Untitled David O RussellProject.

"This type of equityco-financing arrangement allows the studio to manage its risk while retainingcontrol of worldwide marketing and distribution," commented Universal'spresident and chief operating officer Rick Finkelstein.

"We believe our 2006 and 2007 slate offers some of the mostdiverse and promising motion pictures in the marketplace and we are thrilled tobe able to extend our production resources through this financingarrangement," said Columbia Pictures Motion Picture Group chief operatingofficer Bob Osher.

Sony's 2006 slate includes Underworld: Evolution, Freedomland, The Da Vinci Code, Basic Instinct 2, Silent Hill, Marie Antoinette, and Casino Royale.

Relativity, spearheaded by Ryan Kavanaugh, has raised more than $1.5bn for production and slate financing. Its clients have included Atmosphere MM. It also helped structure Paris-based Wild Bunch's new $145m joint-venture dedicated to acquiring and co-producing feature films that willl be then released through a new pan-European distribution network.

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