Who Is Department M, the Company in Talks to Acquire a Stake in Neon?

Neon is in talks to sell a significant stake in its company to Department M, a production company founded two years ago, IndieWire has learned and as first reported by Variety.

It’s unclear the size of the stake Department M would be acquiring, but it is being backed by a consortium of private investors. Neon declined to comment and Department M did not respond to a request for comment.

But while you’ve definitely heard of Neon, Department M is a new name on the radar. The company was founded in 2024 and is led by Mike Larocca and Michael Schaefer. Larocca was the president and co-founder of AGBO, which is the production banner fronted by “Avengers” directors the Russo Brothers, and Schaefer is the former president of New Regency. Larocca oversaw projects like “Extraction,” “The Gray Man,” and the series “Citadel” while at AGBO, and Schaefer was at the helm of New Regency while the studio produced films like “Bohemian Rhapsody,” “The Northman,” and “Barbarian.”

Department M, in its brief existence, is already behind a couple of titles for which general audiences may be aware, including one soon being released by Neon. That film is “The Christophers,” a film from Steven Soderbergh that stars Ian McKellen and Michaela Coel and premiered at last year’s TIFF prior to Neon picking it up for distribution. The company also produced “The Hand That Rocks the Cradle,” a horror film that starred Maika Monroe and launched on Hulu last fall.

Department M’s slate also includes “Blood on Snow,” an adaptation of a Jo Nesbø novel directed by Cary Joji Fukunaga and starring Benedict Cumberbatch and Aaron Taylor-Johnson, a new take on “Count of Monte Cristo” that has Regé Jean-Page attached to star, and the company also optioned the rights to make a movie based on the fad toy dolls Labubu.

Neon back in 2022 explored a sale to Indian Paintbrush’s Steven Rales, but that deal ultimately fell through, and it was at a time when Neon’s rival A24 had also sold a minority stake in its company.

Since then, Neon won another Best Picture Oscar with “Anora” after first winning for “Parasite.” The distributor has also released six straight films to win the Palme D’Or at the Cannes Film Festival, something that is clearly a pet project goal to keep that streak alive. It had one of its biggest commercial successes with “Longlegs,” but it also suffered a bit of a brain drain when three Neon executives left to form a new specialized label at Warner Bros.