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EXCLUSIVE… 2ND UPDATE: Insiders tell me that Relativity Media, which is long backed by New York-based hedge fund Elliott Associates, is joining the expanding list of Hollywood types who want to see nearly bankrupt MGM become a stand-alone but restructured studio. To that end, Relativity has offered a $500M investment in MGM so the studio could start making new productions including more James Bond, The Hobbit pics, etc. It’s not Relativity’s aim to get involved with managing the studio, just to take over a lot of control over the production side. I hear this offer was made 3 weeks ago and kept under wraps. But others have already made similar offers, including News Corp and Qualia Capital, the investment fund run by Amir Malin and Ken Schapiro. The only question now is whether the bondholders, since the studio auction looks busted, will allow MGM to take one of these offers and make more movies — or, worst case scenario, push the studio into bankruptcy.
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I think that’s the best solution. It means another studio to pitch to in an ever shrinking wasteland.
I second that! And my project would be one of the first to go into production (knock on wood!) — so I’d say halleluyah! So, why wouldn’t OTHER writers want an opportunity, too…
Looks like Louis B. Mayer’s pulling some strings from the other side.
Here’s hoping it all works out for them.
But $500m for The Hobbit picS and Bond flicks?
Looks like budgets will be cut back for sure.
I’d love to see this company get reformed, restructured, and rebuilt as an efficient modern studio. I think some of the bondholders are thinking along similar lines, because a bankruptcy sale of the remaining MGM assets wouldn’t net them more than a modest percentage of what’s owed.
So what they can do is:
1. Swap the debt for ownership in the company.
2. Sell the MGM name to Warner Bros. who already own the pre-1986 MGM library, and probably want the name for selling that library. You’re not going to get much, but it’s better than nothing. Find new name and logo for reformed company.
3. Make partnerships with independent financiers and producers with a restructured/renamed MGM acting as distributor at first, then a full production partner once they’re on a surer footing.
4. Make those partnerships simple and straightforward, so that the other independent financing companies and producers will look at MGM as the place to go for a decent deal. They need to do steps 3-4, because they need to get out more than a couple of flicks a year. They need output, in film, TV, and new media, and as much of it as they can get.
5. Do everything they can to make some of that beautiful filthy lucre.
Hm…what could go wrong?
Do what you gotta do to keep this place alive!! And while you’re at it make sure someone buys Overture and Miramax and breathes life into them as well!
With that said, let’s bring back Orion while you’re at it. Man, this town is bleeding buyers. At least I’m hopeful of the Film Department and it’s upcoming IPO.
Alternative Headline: A Fool and His Money are Soon Parted.
Can’t blame MGM anymore. They are clearly just the “addict” and Fox, Relativity or Qualia are the enablers.
It’s also quite possible that the Miramax auction will be a bust as well. Disney looks more & more hurt by the lackluster offers they have (even with Harvey all verklept) & God knows Disney will withdraw it if they could end up looking under appreciated. Is there anyone left that still needs a wake up call that the business paradigm has shifted?
Vollman has a fantastic team there. For the good of the industry- let’s hope they remain a stand
alone entity. Too many have gone these past years. Let’s see what they can do with good product……
I wanna see it survive – but they HAVE to start improving the quality of films.
They should dump Hobbit – cause it’ll suck. An 80′s audience would love it – but it’s 2010.
Here’s some advice for their investors:
Keep Bond – dump the rest. Go visit some of the script writing contest winners (no, I have never won a script writing contest) – and produce some films that make money!
Cause right now – these production costs seem to be more about dishing cash out to their buddies, than actually making films.
Same ol’, same ol’ — This story again? So the dumbass bondholders will say OK, let’s wait, get production money and try to recoup something over five more long years….yeah, right. The building back up to mainstream studio has been tried over and over. That’s the dream MGM has been circulating since the 1960s.Ask the French bank how they felt when it was over!
Put MGM out of its misery. Sell it to Warners; bondholders cut your losses and move on. Why does everyone assume it will work THIS time…The fool and his money line is painfully accurate, alas.
For purely sentimental reasons it would be nice to see MGM roar once again. I grew up at the studio. . I mean what is now called Sony, that was once called Lorimar…. It’s cool. Things change. In those days though, they were still making some fine films and what you’d call classic TV. Though looking at the studios today, it’s hard to find a group of execs who know how to make movies. My question is: Why is it so damn hard to find talented execs who know film making from the ground up? (yeah I know many a good exec. they’re smart in one area and dumb in all else.) WHY aren’t the studios patterned after the old time studios? Are there no Louie B?, Thalberg? Warner? Dumb question? lay it on me.
This sounds like the start of a joke. But why stop at just Relativity?
We can have Media Rights Capital join in on the fun. And you know that Revolution Studios, Rysher and Virtual Studios will want in on this modern day gold rush.
And if they need any advice to help navagate that tricky world of film finance and distribution just phone Credit Lyonnais. They’ll gladly help you out any way they can.
Personally, if I was in charge of a hedge fund I’d take my investors money, cover it in BBQ sauce and then feed it to wild dogs rather than stick it in MGM.
Oh!! MyGosh!
Sorry Furious D, but your idea # 2 is dumb. The M-G-M name is a great asset to the film library and will attract production investment. They need to keep the name and the film library and build on that. New cash for production with a studio head that can can attract top projects is what is needed to save the company. As you say, selling off the library will provide very little to the stockholders anyway. More production is good for the economy and employment. Good luck M-G-M.
Are there any studios that Relativity is not funding? I’m pretty sure that Ryan Kavanaugh made a deal with the devil.
(RE: Furious D) “Find new name and logo for reformed company.”
Simply call the new company United Artists. That name and logo still exists, and most of the remaining MGM library – especially the pre-1986 titles Ted Turner DIDN’T buy – is for all intents and purposes the UA library proper (sans “Gilligan’s Island”).
Regardless, find something for Tom Cruise to do for the reformed company, or buy out his ownership share in UA.
Problem solved.
This $500M are safe – that’s a fine and sure investment. Clever guys – if you take the minimum of the money they make with the hobbit, they will definitely get the $500M back and a nice bunch on top. I am sure they have some strings in the offer concerning this …
Hi there,
Just a note, MGM Studios does not have bonds. Its all private bank loans.
S
Malin may not be the answer.. Remember Cinecom and Artisan
Real simple: SHUT LEO DOWN! Send Hobbit, MGM name/logo & library to WB for Time Warner’s 1.5 bid. Send Bond, UA name/logo & library to Sony for 1.5 billion. Problem solved.
I thought Mary Parent and her Hot Tub Time Machine solved all of MGM’s financial problems. Why do they need outside money? Mary is a genius just let her keep making profitable movies and all these problems will be solved very soon. Hot Tub will easily make $500 million so there’s no need for Relativity. Bad Relativity! Go home! Go away! MGM means Mary’s Great Movies.
The same old people, talking the same old shit about MGM. Most of you said the same when New Line was having trouble. Are you all really that excited about the possibility of everything being run by five buyers? Apparently so.
This financially makes no sense