A version of this story first appeared in the July 4 issue of The Hollywood Reporter magazine.

Earth to Echo is Disney's loss, but it may be Relativity Media's gain -- if the movie does well when it opens July 2.

The $13 million PG film about a tiny alien that looks like a robot and searches for his way home (hello, E.T.?) lost its own home when Disney put it in turnaround last summer.

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Despite producing the picture, Disney made the unusual move not to release it after switching strategies and opting to avoid the ultra-low-budget movie game. Initially known as Untitled Wolf Adventure, the project was greenlighted by production president Sean Bailey during a gap between the reigns of studio chairmen Rich Ross and Alan Horn, and it was shot in a "found-footage" style -- as if the kids in the film were shooting their adventures.

A source with knowledge of the situation says, "After seeing a cut of the film, Horn had his eye on bigger movies and allowed the producers to shop it around." (Disney declined to comment.)

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Producer Andrew Panay then brought Echo to Relativity president Tucker Tooley. The duo decided to pick up the project, and while Disney was required to deliver a completed film with full visual effects, Relativity chose to do significant work on it.

"Because it's sort of in a found-footage language, we needed to stretch it in the opposite direction," says Tooley. "We wanted to make sure it had a family-film stamp on it."

Relativity and Panay spent several months on editorial work and did two to three days of reshoots to make the movie less rough-hewn and more family-friendly. A new scene that was added in, featuring Echo breaking apart a truck as it hurtles toward some kids, was one of the highest-testing scenes in the final product, says Tooley. Additionally, significant work was done the film's visual effects and score.

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"Every studio has sort of mandates that change, and perhaps — I'm just speculating — there was a shift in what they wanted to do," says Tooley of Disney's decision to let the film go.

The new version, completed early this year, now will go up against Transformers: Age of Extinction during the Fourth of July weekend in a summer that's light on family films compared to 2013. "We saw this as a counterprogramming window of opportunity," says Tooley. "It's on a holiday that's very family-oriented, so we're hoping for some success."

Email: Rebecca.Ford@THR.com
Twitter: @Beccamford