Kodak’s bankruptcy is sending shock waves throughout the entertainment industry.
The 131-year-old company’s recent Chapter 11 filing has left most of the major studios out millions of dollars. It has also thrown the name of the theater that hosts the Oscars into question.
Since the Academy Awards moved to the Kodak Theater at Hollywood & Highland a decade ago, the company’s name has been synonymous with the Academy Awards.
That could soon change. On Wednesday, the company asked a U.S. bankruptcy court judge to allow it to get out of its $75 million naming rights deal with the real estate company behind the complex.
“Kodak is proud of its important role in the Entertainment industry, and our long standing relationship with film makers,” Christopher Veronda, a spokesman for Kodak, said in a statement to TheWrap. “Our motion today reflects our commitment to ensure that we are maximizing value for our entertainment customers, creditors and other stakeholders.”
Kodak says that given its recent financial headaches, it can no longer justify the more than $4 million it pays in fees.
Also read: Academy Exercises Kodak Theater Escape Clause
“Under the Contract, the Kodak pays a significant annual amount for, among other things, the naming rights related to the Kodak Theatre,” the filing reads. “The Debtors have evaluated the Contract in consultation with their professional advisors and determined that any benefit related to these rights likely does not exceed or equal the Debtors’ costs associated with the Contract.”
CIM Group, the developer behind the mall, will be free to find a new sponsor for the building, according to an individual with knowledge of the deal. There is one caveat, however.
If the Academy's Board of Governors does not leave the Kodak for another venue — a move it is said to be weighing — it will have veto power over the new corporate sponsor.
Also read: The Oscars Have a Sloppy, Silly Week
“If they wanted to name it gogo.com, we'd have a problem with that. But that's their deal, we're not a part of it,” Tom Sherak, the Academy’s president, told TheWrap.
“I guess you would say we have the right to disapprove, not approve,” he added. “Let's say they brought in Dell, we probably wouldn't disapprove that. We don't approve, but if it was something that didn't work, we'd disapprove.”
That might be a moot point. In December, the Academy exercised an option in its 20-year deal with the owner of the Kodak that allows it to consider other venues before deciding whether to recommit to the Kodak for the final 10 years of its contract. If it does not find another location, it can always stay at the the theater.
Regardless of what happens with the Oscars, if other corporate christenings are any indication, it might even be able to make more money on the naming rights.
For example, Citigroup paid $400 million over 20 years in 2009 to have its name emblazoned above the Mets Stadium in Queens, N.Y. Likewise, Staples shelled out $116 million over the same time frame for rights to the arena where the NBA's Lakers and Clippers play in Los Angeles.
Not that finding a replacement for Kodak will necessarily be easy. CIM has been trying for years to sell the naming rights to the entire Hollywood & Highland complex and has yet to find a buyer. The company did find half a dozen potential sponsors in 2010, but is still continuing to search, according to a report in the Los Angeles Business Journal.
As for Kodak, its Chapter 11 filing has left a number of major entertainment companies with tens of millions of dollars in unpaid bills.
Indeed, the list of Kodak’s unsecured creditors reads like a who’s who of media and technology giants. Kodak owes $16.7 million to Sony, $14.2 million to Warner Bros., $9.3 million to NBC Universal, $6.8 million to Paramount, $4.2 million to Disney, $3 million to Amazon and $12 million to Nokia, according to bankruptcy filings.
Steve Pond and Pamela Chelin contributed to this report Related Articles: Academy Exercises Kodak Theater Escape Clause Tom Sherak Grilled on Ratner, Oscar Hosts: 'Billy Crystal Is Not Too Old!'