Execs at privately held MGM won’t be able to play their cards so close to the vest after the James Bond film Skyfall and The Hobbit: An Unexpected Journey helped to push company revenues for 2012 past $1B. (It ended up with $1.38B). That’s an SEC threshold that will require MGM to publicly disclose registration information it now can keep confidential, CEO Gary Barber told investors in a conference call. Might this make MGM more likely to go public, something it said last year that it’s considering? Barber punted: “We’re coming off of a banner year” which “gives us great options for the future…We look forward to exploring all of those options. Beyond that I cannot comment further.” The CEO also had little to add about Skyfall director Sam Mendes’ decision not to take on the next Bond film. “He decided to pursue other interests at this time,” Barber said, promising to announce a new director “soon.” The screenplay is being developed now and while there’s no timetable the CEO hopes it will be released within three years. With Skyfall and Hobbit working their way through the distribution pipeline, and other films coming including The Hobbit: The Desolation Of Smaug, MGM forecasts that this year’s revenue and cash flow will be close to last year’s. That “would be remarkable,” CFO Dene Stratton says.
When you look at the numbers for the end of 2011 and 2012, you’d almost think they’re from two different companies. In the last three months of 2012 MGM generated net income of $40.2M, up from an $11.3M loss a year ago, on revenues of $902.6M, +561%. Privately held MGM will release more detailed information about the quarter tomorrow. But the statement out today notes that the company revenues for the entire year rose 97.4% to $1.38B with worldwide theatrical up $661M — largely due to the year-end success of Skyfall and The Hobbit: An Unexpected Journey. “With back-to-back films each grossing worldwide box office in excess of $1B, MGM now has two of the top 15 films in box office history,” CEO Gary Barber says. Television licensing revenue was up 6.2% to $395M and home entertainment revenue was up $1M to $195M. There were no new home entertainment releases, but MGM says that the operation generated $96M in Q4 with strong results from its James Bond 50th anniversary promotions.
It’s a good thing the company has the films ahead of it because the Q2 results out today wouldn’t impress many investors if the company proceeds with its recently announced IPO plan. MGM had nothing to say about that effort in its quarterly earnings report to debt holders. But in a conference call today on the Q2 results, MGM Holdings CEO Gary Barber said the transaction to buy back Carl Icahn’s approximate 24% stake in the company – valued at $590M – “has closed and has been fully funded”. The move, he says “provides the board with the flexibility to make capital market decisions that are in the best interest of MGM’s business and our stockholders as a whole, including a possible IPO.” The studio generated net income of $42.6M in the quarter — up from $13.7M a year ago — on revenues of $128.4M, -34%. MGM says the revenue drop is largely due to its decision to hold back on new releases, including “a strategic moratorium we imposed on new DVD shipments for James Bond franchise titles” in the lead-up to Skyfall. The 23rd James Bond film will be released on November 9. Home video sales were -47.9% to $28.4M. The dearth of new TV releases resulted in a 25.3% drop in TV licensing revenues to $70.9M, with much of that coming from syndication of Teen Wolf. Last year the category was helped by USA Network’s domestic …
If you think that The Girl With The Dragon Tattoo was a hit, then talk to MGM Holdings CEO Gary Barber. His company co-financed the film, and although it has generated about $231M at worldwide box offices he tells investors who own MGM’s unlisted shares that “it is below our expectations and we booked a modest loss.” The company wouldn’t say how much it wrote down, but Barber notes that execs ”were hoping we’d do 10% more than we did.” MGM has an option to co-finance the other two films in the trilogy and is talking to Sony about following through “assuming we can achieve better economics.” He was much more upbeat about the early performance of 21 Jump Street, which MGM also co-financed. “We expect it to be profitable,” Barber says. He adds that ”MGM has entered 2012 as a revitalized company.” He declined to describe MGM’s strategy but says it is “evaluating all options.”
MGM Restructure Complete: Spyglass’ Duo Roger Birnbaum And Gary Barber Take Reins With $500 Million To Spend
LOS ANGELES, CA, December 20, 2010 – Metro-Goldwyn-Mayer Inc. today announced that the company’s restructuring has become effective, with exit financing of $500 million in place. The company’s “pre-packaged” plan of reorganization (the “Plan”) was confirmed on December 2, 2010, by the U.S. Bankruptcy Court for the Southern District of New York.
“MGM is emerging from one of the most challenging periods of its storied history. We are honored and inspired at the opportunity of leading one of Hollywood’s most iconic studios into its next generation of unforgettable filmmaking, global television production and distribution, and aggressively pursuing, developing and exploiting new digital entertainment platforms,” said Gary Barber and Roger Birnbaum, Co-Chairmen and Chief Executive Officers of MGM. “Beginning today, MGM is a stronger, more competitive company, with a solid financial foundation and a bright future. We look forward to working with MGM’s dedicated employees to build upon this company’s legacy.”
MGM has a significantly improved financial position with secured lenders exchanging approximately $5 billion, including accrued interest and fees, for most of the equity in the company. As part of its exit financing, MGM raised $500 million to fund operations, including production of a new slate of films and television series. JPMorgan arranged MGM exit financing.
LOS ANGELES, CA, December 2, 2010 – Metro-Goldwyn-Mayer Inc. (“MGM”) today announced that the U.S. Bankruptcy Court for the Southern District of New York (the “Court”) has approved the company’s “pre-packaged” plan of reorganization (the “Plan”), clearing the way for MGM and its subsidiaries to emerge from Chapter 11 in short order. In confirming the Plan, Judge Stuart M. Bernstein found that it satisfied the various requirements of the U.S. Bankruptcy Code.
“Today’s ruling is an important milestone for MGM,” said Co-Chief Executive Officer Stephen Cooper. “Thanks to the support of our lenders and the hard work of our employees, we have moved through the restructuring process quickly. By dramatically reducing MGM’s debt load and providing MGM with access to new capital, the reorganization plan the Court confirmed today will enable MGM to emerge from this process with a solid financial foundation and will position MGM to be a successful studio going forward.”
MGM expects the Plan to become effective by mid-December, once the conditions of effectiveness have been met. Upon its emergence, the Company’s secured lenders will exchange approximately $5 billion, including accrued interest and fees, for most of the equity in MGM. MGM will be led by Gary Barber and Roger Birnbaum, who will serve as Co-Chairman and Chief Executive Officers of MGM Inc. MGM previously received approval, on November 12, 2010, from the Court on its motion to retain JPMorgan Chase to arrange $500 million in exit financing
LOS ANGELES, CA, November 3, 2010 – Metro-Goldwyn-Mayer Inc. (“MGM”) today announced that it and approximately 160 of its affiliates have filed Chapter 11 cases in the U.S. Bankruptcy Court for the Southern District of New York (the “Court”) to seek confirmation of their “pre-packaged” plan of reorganization (“Plan”). MGM has sufficient cash on hand, and the consent of its lenders to use this cash, to fund normal business operations throughout the Chapter 11 process. MGM has filed “first-day” motions seeking immediate Court approval to continue paying its employees, vendors, participants, guilds and licensors in the ordinary course of business during the entire Chapter 11 process, for both pre-petition and post-petition obligations. MGM anticipates that the Plan will be confirmed by the Court in approximately 30 days.
As previously announced on October 29, 2010, MGM’s secured lenders, voting in the Company’s solicitation process, overwhelmingly approved the proposed plan of reorganization. After considering a range of strategic alternatives over the course of the last 15 months, MGM and its secured lenders determined this plan will allow the Company to emerge as a stable enterprise with new leadership at the helm to move MGM forward.
The Plan provides for the Company’s secured lenders to exchange more than $4 billion in outstanding debt for most of the equity in MGM upon its emergence from Chapter 11.
Following the receipt of the requisite consents from its lenders for the Plan, the Company and certain significant consenting
Carl Icahn is now offering 50 cents on the dollar for MGM debt in an attempt to bolster his position before creditors vote Friday on a reorganization plan that puts Spyglass partners Roger Birnbaum and Gary Barber in the driver’s seat of the debt-hobbled studio. Icahn had previously been offering 45 cents on the dollar for debt, and the new offer comes with the stipulation that debt holders vote against the Spyglass offer. Lionsgate brass recently came out with an impassioned speech on why a Lionsgate-Icahn deal was better for creditors than the Spyglass plan which is half a year in the making. Considering how bitter the battle has been between Icahn and Lionsgate brass as he’s tried to take over the minimajor, doesn’t it sound like that couple you know, the one that is fighting constantly and decides that if they just went ahead and had a baby, everything would be perfect? MGM, which watched Mary Parent exit as its pic chief after she was stymied in her efforts to create a production slate for the Lion, needs a steady hand and many feel that the Spyglass guys would provide it. The prepackaged bankruptcy with Birnbaum and Barber has never been viewed as a permanent solution. It has always been viewed by insiders as “kicking the can down the road.” Bolder plays with an outside suitor like Lionsgate is necessary later on, but it doesn’t necessarily have to …
Calling the proposed Spyglass plan a “presciption for disaster,” Carl Icahn on Thursday offered to buy another $963 million of MGM’s debt. He already owns around $500 million of it, so the sum would make him one of MGM’s largest creditors – with a stake of around 37%. Pending the offer, he would then be in a good position to approve a merger between Lionsgate and the studio, one he now supports. Some of MGM’s creditors are pushing hard for that prepackaged bankruptcy plan that would instead see Spyglass’ Gary Barber and Roger Birnbaum come in and run the studio. As a condition of his offer, Icahn said anyone selling to him must vote against the Spyglass plan; a vote is scheduled for Oct. 29. Icahn also stated on Thursday: “This is the critical decision point for MGM lenders, yet we are being rushed into an extraordinary Prepackaged Plan with limited information and input, on a “hurry up basis” that frustrates any dissent. I hope to defeat this “rush to judgment.”
BREAKING NEWS… UPDATE: She has signed a non-disclosure agreement and therefore can’t talk publicly to the media. But, making no secret that she was negotiating her exit from MGM after taking the job in April 2008, Mary Parent this afternoon is now officially out at the studio where she was Chairman of the Motion Picture Group and Co-CEO. It’s a sad ending to Parent’s struggle to revive the debt-ridden cash-strapped studio and get it producing and distributing movies again against huge odds. That she was able to accomplish anything at all, even a few releases and co-productions, is testament to her professionalism and personality. Hollywood needs to salute her.
Parent and her staff, meanwhile, has had to go into the Century City offices every day for months and basically do nothing. “A really good group of people came in here to sit on the bench in their prime. What wasted capabilities and wasted potential,” she has told pals. In private conversations with Hollywood, she called it “a perfect storm against us” of events that sank her management team. She’ll probably catch her breath before thinking about another job. (The offers are just coming in now.) In the end, she like everybody else puts all the responsibility for the studio’s demise on Harry Sloan and his inability to tell the truth. ”In a weird way, it’s like coming off a bad relationship,” she told a friend Friday. “I married the wrong guy and woke up pregnant.” (see below for more)
2ND UPDATE: MGM has just confirmed Deadline’s report that it has formally named Spyglass partners Gary Barber and Roger Birnbaum its new chairmen/CEOs, and the studio has just issued a press release describing its reorganization effort. It appears below. What isn’t answered is whether MGM will be revived as an entity that strips off its distribution and marketing arms, and makes a distribution deal for product that will include the next installment of James Bond. Deadline was first to tell you on June 29 that the reorganization plan called for MGM to reemerge as a production facility. The advantage is saving money on manpower and other costs, but eventually some of that would be wiped out by having to pay a distribution fee to someone else. What is clear is that the recent MGM developments put Mary Parent one step closer to the exit, and already, rumors are making the rounds of where she will land a production deal. I called the offices of Birnbaum and Barber but was told they are prohibited from commenting at this point.
UPDATE: I’m told that MGM will shortly announce Gary Barber and Roger Birnbaum as its new co-chairmen/CEOs, effective once MGM emerges from Chapter 11. They don’t officially take office until MGM emerges from bankruptcy. This is part of the long expected restructuring plan, as MGM brass has begun to solicit votes from lenders to convert 100% of the …
Indian conglomerate Sahara India Pariwar is reported to be in exploratory talks to buy the debt-hobbled MGM studio for $2 billion, according to the Wall Street Journal. Bloomberg adds that the Broccoli family, owners of the James Bond rights, are aligned. What an endless soap opera. Later, Bloomberg corrected itself to say that Eon disavowed even knowing about the Indian bid.
MGM creditors will be asked to approve a restructuring and pre-packaged bankruptcy plan for the studio within the next week or two, Bloomberg reports. This follows Spyglass chiefs Roger Birnbaum and Gary Barber’s signing non-binding letters of intent on Wednesday to become MGM co-chairmen/CEOs. So this next step of a pre-packaged bankruptcy proceeding has been expected for months. It would convert debt to equity and remove the $4 billion debt which has crippled the studio so that it can start generating films again. According to Bloomberg, Birnbaum and Barber would receive 5% of the merged company for their film library, valued at $100M.
As expected, the MGM ownership situation is getting closer to being sorted, and it won’t be long before the Lion has a chance to roar again. Or at least emerge from its cage. Spyglass chiefs Roger Birnbaum and Gary Barber have signed non-binding letters of intent that will make them MGM co-chairmen/CEOs. That leads to the next step, which is a pre-packaged bankruptcy proceeding that would convert debt to equity, removing the $4 billion albatross from around the Lion’s neck so that it can start generating films again. The prepackaged bankruptcy allows the company to be restructured while it freezes existing deals for franchises that include the James Bond series and The Hobbit.
The LA Times reports that the Spyglass guys are already looking past this hurdle, and are talking with Ken Schapiro about coming aboard as COO. He’s a vet of Qualia Capital, which was among the entities that kicked the tires on MGM before management decided to go with Birnbaum and Barber, who are expected to make projects but will likely eliminate the studio’s marketing and distribution arms and set the projects up elsewhere. All this means that The Hobbit, with Peter Jackson at the helm, can move forward, with co-financing partner Warner Bros distributing the two films worldwide.
Reading these obits on James Bond, I think reports of 007′s motion picture demise because of MGM’s near-bankruptcy have been greatly exaggerated. Despite an article out of the UK that spread virally, insiders insist nothing tangible has happened. While Sony, Fox, and Warner Bros would love to grab the Eon Productions franchise, I’m told reliably that as long as MGM’s debt restructuring is preceded by a pre-packaged bankruptcy, Bond isn’t going anywhere. [UPDATE: “You are absolutely right, there is no new news. Development will resume once MGM is viable again, as Danjaq can't go anywhere without them. So all bets are off. No idea when this will get resolved,” a source integral to the Bond franchise told Deadline London editor Tim Adler today. Eon is a subsidiary of Danjaq, the Broccoli family holding company responsible for the copyright and trademarks to everything James Bond on screen.] While the studio’s beleaguered backers unwisely allowed MGM and its library to languish by not making new movies and benching MGM’s creative and marketing/distribution executives while it staged a futile sales auction that attracted bottom-fishing bids, MGM has made sure to meets the minimum obligations to its two gems, James Bond and The Hobbit. The studio is mulling whether to change its lethargic strategy and free up money for back-to-back Hobbit films to keep the first film on track for a December 2012 release. That’s because Peter Jackson is willing to direct the films but might not if …
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 …