For weeks now, we have been hearing from our various sources at studios, agencies and production companies that Spyglass Entertainment is in the lead to run a restructured MGM despite Summit Entertainment also being very much in the mix. But it’s been near-impossible to get any confirmations, so we’ve held back writing. Though we almost posted last week when we received a batch of new and detailed information.
Well, tonight, the Wall Street Journal published that and everything else we’d heard, also with no confirmations. The WSJ emphasizes that talks are continuing and no final decisions have been made. So the paper’s info is exactly where our info is: not pinned down.
Here is where things stand: Spyglass co-heads Gary Barber and Roger Birnbaum would run the studio as co-chief executives under the current restructuring plan being discussed with a group of large MGM’s creditors. But Summit toppers also are still very much under consideration and haven’t heard they’re out of it — at least not yet. I can report that this lead group of MGM creditors consists of Anchorage Advisors, Highland Capital Management, and Davidson Kempner Capital Management who have banded together. Led by Anchorage, they bought up MGM debt on the cheap so that they now represent what I’m told is about $400 million of it. (The WSJ says it’s about 1/3 of the outstanding debt which was purchased for $.60 on the dollar.) They believe that gives them the leverage, with JP Morgan Chase, to decide MGM’s fate.
They’re now convinced that the Spyglass execs have the right stuff to oversee the Bond films, and The Hobbit films, and the 3 Stooges film and other MGM assets after what they thought was a rather convincing presentation which Spyglass gave the group. Their proposals included making the usual mix of low-budget and high-priced films. Summit proposed a merger with MGM that would lead to making its usual mix of low-budget, high-impact movies and eventually an IPO. MGM’s current management proposed the most risky plan by asking for $1B in new money to bankroll a slate of expensive blockbusters.
Who runs the newly restructured MGM is important because the creditors would be swapping their debt for equity in the new company, and the new overseers also would be getting a small slice of the pie. Smaller Spyglass’ piece would be less than larger Summit’s, so that may have been on the hedge funds’ minds. Spyglass is an investment holding of the private equity firm Cerberus Capital Management.
When might a firm decision be reached? Maybe as soon as mid-July. Maybe not until the fall. Time Warner’s lowball auction offer is still hanging out there. We never thought Terry Semel was a serious contender. Peter Chernin has said he’s not interested. (Though one source told us that Fox might want to roll Chernin’s deal into an MGM investment. That’s how badly the studio wants the Bond franchise.)


Why in the world would Chernin allow Fox to roll his deal into an MGM investment? He has one of the best deals out there. Don’t see that happening. Spyglass? Finally some people who know how to run things, might work. Who knows. Summit?
Did I just see you write that Spyglass knows how to run things? Like what? They know how to buy in to things like “Seabiscuit” and “Star Trek,” but running their own movies has been a disaster. See “Stick It,” “Connie and Carla,” “Balls of Fury,” “Reign of Fire,” and the list goes on and on and on…
don’t forget Leap Year (non-stars in a tired, retread premise) and Hitchhikers Guide to the Galaxy (WAY too expensive and WAY too esoteric). these guys wouldn’t know a Bourne Identity nor a Meet the Folkers if it walked right up to them and bit them in their cerebrus….
You just described what MGM has been doing. LOL. Difference? And hey, some of those titles you mentioned should have won Oscars.
Now that Spyglass is running things at MGM I hope they will soon green light SGA and SG1 movies. Also do we still write Gary Barber and Roger Birnbaum at Spyglass or MGM?
I am confident the lead debt holders control much more than 400 million dollars. There is no way they would be dictating things unless they did and there is no way they would be able to control recapitalization if they did not. With that said, why is there any contemplation of business as usual for MGM? Spyglass and Summit will do precisely what former management did, look at everything through the same viewfinder and ultimately make some big bets which will fail and once again cripple the Studio. This is probably the last shot for the Lion and all the reporting on the subject has been about the same old tired approach to the Studio business. With that library of titles, one would think someone smart might come in an conceptualize a Studio that stands apart from the norm. A studio that focuses more on television and the digital business while making smartly budgeted genre pictures that enhance the value of the library. If Fox wants Bond so much, MGM should strike a strategic deal that caps their investment and allows them to control foreign and home video… and the same for the Hobbit and whatever other big franchises they think they have. And please, while analysis is underway, put The Three Stooges in turnaround and run from the inevitable train-wreck that will be. The world is dying for an entertainment company that is lean and forward thinking. All of this talk is so yesterday and sadly, will ultimately undo this moment in time when someone smart has a shot to do something visionary.
Money Man: You’re Hired. (please)
All these updates are nothing more than MGM and it’s creditors spinning their wheels in the mud to make it look like they are trying to move forward.
But they are stuck. And going nowhere.
The simple fact of the matter is everyone knows MGM has officially become too heavy to move forward. The weight of it’s debt will crush it sooner or later, new management or not.
All the while Time Warner sits on the side lines with their arms crossed waiting for this house of cards to fall and the creditors to snap up their offer.
When is this story going to be over? I am so tired of the entire frigging story – if it were a TV series, even CBS would have canceled it by now. if it were a franchise, it would be direct to DVD. enough already. who is even paying any attention anymore?
Spyglass seem like the only ones capable of at least a decent shot at turning the studio around. But yeah, no matter what at some point MGM is going under, its just a matter of when not if.
Sorry but Spyglass is ONLY smart about investing in ready to go movies but they can’t develop anything and always go cheap, obvious, and ham fisted. Creatively they are a ZERO. Gary is the one making the real money and the smart decisions at that company. Them overseeing anything creatively for BOND, HOBBIT, etc. is terrifying.
MoneyMan is right on the nose. If MGM wants to survive, STOP thinking like some kind of 20th century studio. You have every op in the world to strike out for something different.
Perhaps lower-budget genre, lower-budget indies that could win awards (Lord knows we could use a real indie powerhouse again) and a few of those hot franchises (Bond, Hobbit) with shared dom/for deals. Jettison UA and it’s Cruisian excess and leverage the library with networks: look at TCM – it manages to keep on keepin on. Then U can make deals with real talent wanting to make pix (for cheap), create genre cashflow (hello Platinum Dunes) and keep a few big tentpoles that allow merchandising juggernauts.
Warner Borg – I believe that MGM will be able to rid itself of the 3.7 Billion in debt when and if it chooses to go through a pre-package bankruptcy which would make your point (“The weight of its debt will crush it sooner or later”) mute along some other similar comments on this post. But regarding where MGM goes after the bankruptcy I think Money Many said it perfectly and they should pay heed to this advice and stay as far always from Summit and Spy Glass or any other entity whose only interest is to feed on MGM’s corpse. The few things leaked to the press prove that these folks have no original ideas that are going to take MGM any place better than where it is right now.