The Oscar-winning indie studio Neon is in preliminary discussions to sell a meaningful equity stake to Department M, a production company founded in 2024 by Mike Larocca and Michael Schaefer. The talks, reported in 2026, are said to be backed by a consortium of private investors that originally financed Department M at its launch. If completed, the transaction would mark a major shift for Neon, the distributor-producer behind Academy Award best picture winners Parasite and Anora. Both companies have not provided a public comment on the negotiations.
Key Takeaways
- Department M — launched in 2024 by Mike Larocca and Michael Schaefer — is in talks to acquire a significant stake in Neon, according to people familiar with the matter.
- A consortium of private backers that financed Department M’s 2024 launch is reported to be supporting the proposed Neon purchase.
- Neon, founded in 2017 by Tom Quinn, counts two Best Picture winners — Parasite and Anora — among its credits, bolstering its indie-market value.
- Neon’s recent slate includes titles such as Joachim Trier’s Sentimental Value and Jafar Panahi’s It Was Just An Accident, plus the 2025 box-office hit Longlegs, which grossed nearly $130 million.
- The studio previously explored a sale in 2022; a prospective deal with investor Steven Rales did not close.
- Department M’s upcoming projects include Blood on Snow (starring Aaron Taylor-Johnson and Benedict Cumberbatch, to be directed by Cary Joji Fukunaga) and a remake of The Hand That Rocks the Cradle by Michelle Garza Cervera.
- Key executives involved have prior senior roles: Schaefer was president of New Regency; Larocca co-founded AGBO with Joe and Anthony Russo.
Background
Neon launched in 2017 under Tom Quinn, who had leadership experience at Radius and Magnolia. The studio quickly built a reputation in arthouse and genre cinema, culminating in blockbuster and awards success that raised its profile in both critical and commercial circles. Parasite’s Best Picture win and a subsequent Best Picture for Anora positioned Neon as a premier force in independent film distribution and production.
Department M is a newer entrant, established in 2024 by Mike Larocca and Michael Schaefer. The company was seeded by private capital when it launched, assembling a development slate that mixes commercial and prestige projects. Its board and producers draw on deep studio and independent experience, which has helped the company secure high-profile attachments such as Cary Joji Fukunaga and stars like Aaron Taylor-Johnson.
Main Event
Sources briefed on the negotiations say Department M has opened talks to acquire a substantial stake in Neon; details on valuation, percentage ownership or governance changes have not been disclosed. The effort is reportedly supported by the same private investors who financed Department M’s founding in 2024, according to those same people. Representatives for both companies have been approached for comment; Department M declined and Neon did not immediately respond.
The current discussions follow a prior attempt to sell Neon in 2022, when a proposed deal involving investor Steven Rales and his company Indian Paintbrush failed to reach fruition. That episode underscored both the studio’s attractiveness and the challenges of aligning strategic and financial terms for an indie outfit with rising market value.
Neon’s recent release list includes a mix of auteur and genre films — Joachim Trier’s Sentimental Value, Jafar Panahi’s Palme d’Or winner It Was Just An Accident, Kleber Mendonça Filho’s The Secret Agent, Oliver Laxe’s Sirât, Park Chan-wook’s No Other Choice, and Ugo Bienvenu’s Arco. Additionally, the horror release Longlegs became a rare indie-driven box-office success in 2025, taking in nearly $130 million globally.
Analysis & Implications
A sale or partial stake transfer would reshape Neon’s strategic options. New capital and relationships could expand Neon’s capacity to finance and distribute bigger-budget titles while preserving its specialty brand — but only if deal terms protect the studio’s programming autonomy. Buyers often seek both upside from proven brands and control to influence slate decisions; how much autonomy Neon’s founders and creative partners retain will be a key negotiating point.
For Department M, acquiring part of Neon would accelerate its growth trajectory, giving the young company an established distribution platform and a library with high-profile award credentials. That combination could create economies of scale in marketing and international sales, and potentially attract new projects keen to reach both festival and mainstream audiences.
Market timing is relevant: specialty distributors have faced both consolidation pressure and sporadic breakout commercial hits in recent years. Neon’s dual Best Picture wins and the breakout earnings of Longlegs make it a rare blend of critical prestige and revenue potential, increasing its appeal to investors seeking assets that can perform across channels.
Possible downsides include cultural friction if investor expectations push Neon toward more conventional commercial fare, which could alienate the filmmakers and festivals that have been key to its brand. The ultimate impact will depend on governance arrangements, investment horizon of the backers, and whether creative leadership remains empowered to greenlight riskier auteur projects.
Comparison & Data
| Metric | Neon (recent) | Department M (recent) |
|---|---|---|
| Founding year | 2017 | 2024 |
| Notable awards | Parasite, Anora (Best Picture) | — |
| Notable 2024–25 box office | Longlegs — nearly $130M (2025) | Projects in production: Blood on Snow; Hand That Rocks the Cradle remake |
The table above highlights the complementary profiles: Neon brings an award-winning library and proven distribution track record, while Department M brings fresh production capacity and investor backing. Such pairings are common when investors look to combine content creation with established distribution channels to capture more of the value chain.
Reactions & Quotes
Industry sources and trade reporting framed the talks as an opportunistic alignment between an established indie label and a financed production company.
A consortium of private investors is backing Department M in the effort, according to people with knowledge of the negotiations.
Two people with knowledge (trade sources)
Observers noted Neon’s prior exploration of a sale in 2022, which did not result in a transaction.
Neon previously explored a sale in 2022 that ultimately did not close.
Industry reporting (Variety)
Public comment has been limited as the discussions remain private and preliminary.
Department M declined to comment. A Neon spokesperson did not immediately respond to requests for comment.
Variety reporting
Unconfirmed
- The exact percentage stake Department M is seeking in Neon has not been disclosed and remains unconfirmed.
- The identities of all private investors in the consortium backing Department M were not publicly named.
- Terms, valuation and a potential timeline for a transaction have not been confirmed and may change as negotiations proceed.
Bottom Line
The reported talks between Department M and Neon pair a nascent, well-funded production company with a high-profile indie distributor whose library includes multiple Best Picture winners. If a deal is completed, it could accelerate Department M’s distribution reach while providing Neon with fresh capital; the commercial outcome will hinge on deal structure and protections for Neon’s creative strategy.
Watch for announcements on governance terms and whether creative leadership at Neon retains decision-making power. Those details will determine whether the transaction — if it closes — enhances Neon’s capacity to back ambitious auteur cinema or nudges it toward a more mainstream slate.
Sources
- Variety — Trade press report on negotiations and industry details.