Sony Pictures and co-financing partner LStar Capital cut ties

’ co-financing deal with LStar Capital is dead after three years, following a long period of box office struggles at the Culver City studio.

LStar agreed to invest in Sony’s movies as part of a $200-million pact that promised to mitigate the risks of potential duds. The pact wasn’t working well for either partner, and the companies have been reevaluating the deal for months, according to people with knowledge of the matter who weren’t authorized to speak publicly.

Most studios have teamed with co-financing partners to share the burden of their expensive movie slates at a time when the film business is becoming riskier. has a longtime arrangement with film production and financing company Village Roadshow, and Universal Pictures secured a deal for China’s Perfect World Pictures to help fund its films. Co-financiers cushion the blow when movies flop and also reap benefits when they do well.

Sony had more flops than hits in recent years. While LStar got a boost from the recent success of “Spider-Man: Homecoming,” the investor also felt the pain of duds including “The Brothers Grimsby," “Pixels” and “Passengers.”

For its part, LStar backed out of its commitment to co-finance Sony’s 2016 big-budget "Ghostbusters” reboot, which did mediocre business at the box office and was attacked by online trolls. Sony had hoped LStar would help fund its upcoming computer-animated comedy “The Emoji Movie" and the sci-fi thriller “Flatliners,” covering 25% of their respective production budgets.

LStar is the credit financing arm of Lone Star Funds, a Dallas-based private equity firm. The deal with Sony Pictures, the movie unit of Tokyo-based Sony Corp., was its first film business investment.

A representative for Lone Star declined to comment.

"Lone Star has been a great partner for several years,” Sony Pictures said in a statement. “The decision to part ways was mutual, and won’t impact the studio’s plans or our strong slate of upcoming films moving forward.”

Much has changed at Sony since the LStar deal was signed in mid-2014. The studio weathered a massive cyberattack in late 2014 and multiple executive shakeups triggered by financial disappointments.

The film unit is now run by Tom Rothman, who replaced Amy Pascal in 2015. Sony Pictures Chairman Michael Lynton was recently replaced by former Fox television executive Tony Vinciquerra. Lynton is now chairman of Snapchat maker Snap Inc.

Sony has not said whether it will seek a new financing partner.

The company has experienced recent back-to-back hits with “Spider-Man,” co-produced by Marvel Studios, and the action film “Baby Driver,” which was financed by Media Rights Capital.

Along with “The Emoji Movie” and “Flatliners,” the studio’s slate includes gambles such as the adaptation “The Dark Tower" and a “Jumanji” reboot.

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