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MGM sale not a roar but a whimper
Chris Forrester ©RapidTVNews | 21-03-2010
It seems few people admire Leo the Lion, the loud on-screen voice of MGM Studios. MGM’s asset auction looks like being a disaster.
The interested parties have been whittled down from about six to only about three: Time Warner, Lions Gate and Access Industries. Previously interested parties such as Liberty Media, News Corp, and others have reportedly cooled on the auction. Closing bids had to be submitted by Friday evening (March 19).
One of the major problems is the perceived decline in interest in MGM’s fabulous archive, which back in 2008 brought in an impressive $460m from the sale of DVDs and TV exposure. The same portfolio of sales is expected this year to generate just $280m, and perhaps as low as $220m by 2012. Generating $440m or so and anyone would be interested, but with sales of barely $200m then the same value is savaged unless some enterprising buyer can tap into new revenue streams.
Plan B, if the auction fails to meet expectations, is that MGM’s existing $4bn in debt will be converted to equity in a restructured MGM. Today’s thoughts are that MGM needs much better than $2bn to be bid to avoid a Chapter 11 restructuring.
That restructuring might even end up with two on-going assets, the archive and a spun-off James Bond franchise. The Bond legacy and future earnings are said to be worth $1bn in their own right.
© Rapid TV News 2010
