Indie film distributor the Orchard was on a roll. Then the Louis C.K. sex scandal blew up

It was shaping up to be a banner year for the Orchard, the New York music distributor that two years ago turned toward the unpredictable business of indie and foreign film distribution.

At the Cannes Film Festival in May, the company beat out its rivals to acquire one of the main competition’s biggest titles — “BPM (Beats Per Minute),” the acclaimed French drama about the early days of AIDS activism that won the festival’s Grand Prix, or second-place prize. Earlier this year, the Orchard scored an Oscar nomination for “Life, Animated,” the quirky autism-meets-animation documentary it bought at Sundance.

Louis C.K.’s movie “I Love You, Daddy” was supposed to add to the harvest when the company scooped it up at this year’s Toronto International Film Festival for an estimated $5 million. But the sexual misconduct allegations that engulfed the comedian-filmmaker this week have effectively killed the deal, with the Orchard deciding to drop the title just one week before it was scheduled to open in cinemas.

The Orchard declined to comment beyond a statement released Friday that said the company “will not be moving forward with the release of ‘I Love You, Daddy.’” It remains unclear if the black-and-white feature film — which Louis C.K. wrote, directed, produced and stars in — will be sold to another distributor or if it will skip theaters altogether.

The fallout continued late Friday when FX Networks and FX Productions, both divisions of 21st Century Fox, announced they are ending their association with Louis C.K. on the four series they are producing with him — “Better Things” and “Baskets,” which both air on FX; “One Mississippi,” which is on Amazon; and the planned animated series “The Cops,” which was to air on TBS.

“He will no longer serve as executive producer or receive compensation on any of the four shows,” FX said in a statement.

Five women accused Louis C.K. of sexual misconduct, including masturbating in front of them, in an article published Thursday by the New York Times. The comedian confirmed the incidents, which date back as far as 2002, in a statement released Friday.

“These stories are true,” he said. “At the time, I said to myself that what I did was okay because I never showed a woman my [penis] without asking first, which is also true. But what I learned later in life, too late, is that when you have power over another person, asking them to look at your [penis] isn’t a question. It’s a predicament for them. The power I had over these women is that they admired me. And I wielded that power irresponsibly.”

For the Orchard, the scandal represents a major public relations setback, just as it was hitting its stride in the indie film industry. The boutique distributor had already sent awards-consideration screeners of the movie and had released marketing material, including trailers and advertising. The movie’s premiere in New York was canceled Thursday hours before the story broke.

“I Love You, Daddy” follows a veteran television producer (Louis C.K.) who is trying to stop a 68-year-old filmmaker (John Malkovich) from dating his teenage daughter (Chloë Grace Moretz). In one scene, a character played by actor Charlie Day mimes masturbation as he and Louis C.K.’s character discuss a female character. He also encourages Louis C.K.’s character to confront Malkovich’s character about rumors of sexual predation that mar the older man’s public image.

“I was as appalled as everyone to read the allegations made in the New York Times,” Day said in a statement to the L.A. Times. “I do not condone sexual misconduct and, in light of the allegations, will not be promoting the movie further.”

Moretz pulled out of all film promotion two weeks ago “when she was made aware of numerous possible accusations,” her publicist told The Times.

Other members of the “I Love You, Daddy” cast, which includes Rose Byrne, Edie Falco, Helen Hunt, Pamela Adlon and Malkovich, were not immediately available for comment.

Louis C.K. is the latest Hollywood figure to be felled by a sex scandal, following producer Harvey Weinstein, producer-director Brett Ratner and actor Kevin Spacey.

The more than 100 allegations against Weinstein — which range from harassment to rape — could have dire consequences for Weinstein Co., his indie film and TV company that is currently looking for a financial lifeline to prevent a possible bankruptcy.

The fallout from the Louis C.K. scandal isn’t expected to be fatal to the Orchard, though the company will likely have to absorb most if not all of its investment in the movie if it fails to find another buyer. “In all likelihood, they would be writing off the $5 million,” said Brian Kingman, managing director at Arthur J. Gallagher & Co., an insurance and risk management firm, where he works with entertainment clients.

Though insurance policies exist to cover acts of moral turpitude that would render a project valueless, it is unlikely that the company purchased one for such a small film, Kingman said.

The privately held Orchard is likely to rebound thanks to the deep pockets of its owner, Sony Music Entertainment, which took full control of the company in 2015 after previously owning a 51% stake. Sony Music didn’t respond to a request for comment.

The Orchard was founded in 1997 by songwriter-producer Richard Gottehrer and digital music executive Scott Cohen. The company made money by holding the rights to release more than 9 million tracks from record labels and indie artists through online services such as iTunes and Spotify.

Before segueing into theatrical distribution two years ago, it got its feet wet in movies by digitally releasing sports, horror and obscure indie movies, amassing a library of more than 2,000 titles. Indie distributors typically rely on their libraries as well as the home video and streaming markets to generate the bulk of their revenue, with theatrical releases accounting for a small portion of their overall business.

In a short amount of time, the Orchard has forged relationships with auteur talent, including mumblecore veterans Mark and Jay Duplass, with whom the company struck a seven-film deal in 2015. It has released two films by the acclaimed Norwegian director Joachim Trier, including the unconventional thriller “Thelma,” which opened this weekend in New York.

The Orchard has developed a reputation for aggressive acquisition tactics and has also poached executive talent from its rivals, according to one industry insider.

The company’s biggest theatrical release to date was the Taika Waititi-directed movie “Hunt for the Wilderpeople,” which grossed a little more than $5 million in the U.S. when it was released last year. Waititi directed this year’s Marvel superhero sequel “Thor: Ragnarok.”

Its acquisitions this year at Cannes and Toronto have helped to elevate the Orchard to within the vicinity of the indie world’s top distributors, including its corporate cousin Sony Pictures Classics, as well as A24 and Magnolia Pictures.

The Louis C.K. debacle will test the company’s resilience, but it isn’t the only indie distributor to have to endure a sex-related scandal tied to one of its titles.

Fox Searchlight faced a publicity firestorm last year with “Birth of a Nation,” when rape allegations resurfaced against writer-director-star Nate Parker, who denied the accusations. The movie, which was acquired for $17.5 million at Sundance, was released in theaters as scheduled but was a box-office disappointment.

Summit Entertainment released Roman Polanski’s “The Ghost Writer” in 2010 when the filmmaker was still under house arrest in Switzerland, facing a U.S. extradition request related to his 1977 statutory rape case. The movie generated a respectable $15.5 million domestically in limited release.

Times staff writers Ryan Faughnder and Amy Kaufman contributed to this report.

david.ng@latimes.com

@DavidNgLAT