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Warner Brothers contemplated and walked from buying MGM
Source: Business Week
The once fabled MGM studio is hanging by a thread. On Oct. 1, its banks agreed to allow the debt-hobbled studio to forego its monthly debt payments on $3.5 billion in debt through December 15, although bankruptcy remains a distinct possibility after then.
But back in May, I’m told, Warner Brothers(TWX) fancied itself as the white knight that intended to rescue MGM. Well, sort of. Back then, the studio sent its numbers crunchers to do a “deep dive” into MGM’s finances with the intent on buying the studio, according to sources with knowledge of that effort. The Warner Brothers plan: to essentially put MGM out of its misery, shutting down production other than a few high-end titles, notably the James Bond series and the Lord of the Rings prequel The Hobbit.
Warner and MGM aren’t talking, but Warner had every reason to be interested in getting its hands on MGM. It owns the U.S. rights to distribute The Hobbit, which is being produced by Lord of the Rings director Peter Jackson. MGM ahs the foreign rights. And it owns many of the older MGM films, like Gone with the Wind, dating back to Ted Turner’s 1986 deal with then studio owner Kirk Kerkorian.
The problem is that, after adding in the Bond franchise (which is worth perhaps $1 billion by itself) Warner number crunchers figured it would take nearly $2 billion to buy the studio. Even then, Warner would still need to deal with its monster debt. It contemplated buying up that debt, which was then selling at around 50 cents on the dollar, but even that was too pricey.
That numbers being thrown around were more than the studio mavens figured they could sell to MGM CEO Jeff Bewkes, and it never got up the chain for him to see. Ironically, back in 2004 Time Warner contemplated buying MGM for nearly $4.8 billion, but backed out of a bidding war with a private equity group that Sony assembled. You have to think that someone at Time Warner must have been living right.
Now MGM is twisting in the wind. Its private equity owners have hired restructuring expert Stephen Cooper to restructure its $3.7 billion in debt. So far, he has won a reprieve from the banks, and might get them to extend their forbearance to February. But to do that, Cooper has to come up with a sellable business plan for a business whose prospects are fading. The studio will take a bath on its latest film, the musical Fame, and its library of 4,000 older films is aging and suffering as DVD sales tank.
Then again, Warner could still come back into the picture. It wouldn’t be the first time.
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|kbond007||MGM Buy out||4||Oct 15 2009, 5:41 AM EDT by Budjettivaje|
Thread started: Oct 11 2009, 8:07 PM EDT Watch
If WB is to buy out MGM it would be stupid for them to Drop Bond I mean the Bond movie franchise is MGM longest running and most popular movie series spaning a total of 22 movies over almost 50 years of history each bond movie has massed over a million dollars to over a couple hundred million dollars in sales and busted the boxoffice many times. I WB droped bond after buying out MGM they would porbally have made a big financial mistake not to mention the global fanbase and the number of boycots it would cause for droping bond.
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|007Domanator||Warner to buy MGM AND JAMES BOND?||2||Oct 10 2009, 9:09 PM EDT by 007Domanator|
Thread started: Oct 10 2009, 2:35 PM EDT Watch
The rumor is that Warner Bros will buy MGM if they do they will also have the rights to James bond . Will Warner Brothers keep bond? What your thoughts
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