I heard about a few secret layoffs at MGM right before Christmas 2010, and as recently as January 28th. Today, MGM laid off its entire Digital Department before the big move to the studio’s new Beverly Hills location. Post-bankrupt MGM is now under the control of Spyglass Entertainment’s Gary Barber and Roger Birnbaum.
In one of its first moves as it is emerging from bankruptcy, MGM is making a play in the digital world, teaming with digital station operator Weigel Broadcasting for the launch of Me-TV, a television network offering classic television sitcoms, dramas and classic commercials to digital broadcast stations. Me-TV, which stands for Memorable Entertainment Television, has already been tested on a local level: a local version of the network has been airing on Weigel Broadcasting’s WWME in Chicago. WWME and Weigel’s station WBME, which covers the Milwaukee/Racine metro area, have become the first affiliates of Me-TV, whose lineup consists of Cheers, M*A*S*H, The Dick Van Dyke Show and The Bob Newhart Show. Me-TV, whose national distribution will be handled by MGM’s domestic television sales division, follows MGM and Weigel’s collaboration on the 2008 launch of Thistv, a free movie service.
The Beverly Hills Courier broke this real estate story and now it’s confirmed: on Sunday, MGM signed a lease with New York-based George Comfort & Sons for that 6-story big blue office building at the corner of 235-269 N. Beverly Drive that was initially going to be the new home of the old William Morris Agency. But when that tenpercentery was taken over by Endeavor, the move was nixed. So MGM is emerging from bankruptcy by leaving its current headquarters in Century City at its namesake building.
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.
Most of the bigwigs left weeks ago, but today MGM began laying off 50 staffers, mostly from the post-production, marketing, and theatrical distribution departments. Once Spyglass Entertainment’s Gary Barber and Roger Birnbaum start running the studio when it emerges from its prepackaged bankruptcy and closes a $500M credit facility to make movies again, MGM said in court papers that its employee roster will number about 320 in 2011.
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
Metro-Goldwyn-Mayer Inc. (“MGM”) announced that the U.S. Bankruptcy Court for the Southern District of New York approved all of MGM’s motions that were heard today, including finding that modifications to its “pre-packaged” plan of reorganization are immaterial and accordingly authorizing the plan to be amended. Once amended, the plan will be deemed accepted by MGM’s creditors. Other motions approved were the commitment fee motion, the break-up fee motion, the Ernst &Young LLP retention application, the space reduction motion and final approval of the cash management motion. Approval of these motions will help pave the way for MGM to confirm its plan, which received overwhelming approval by its secured lenders on October 29.
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
BREAKING: In the latest development in Carl Icahn’s attempt to take over Lionsgate and merge its assets with MGM, a Supreme Court judge in British Columbia has dismissed Icahn’s lawsuit to thwart a Lionsgate de-leveraging move on July 20 that took $100 million in debt off the books and converted it into equity, which was bought by shareholder John Kornitzer, who is loyal to the existing Lionsgate brass. In a separate third party transaction, Kornitzer sold those shares to Mark Rachesky, who is on the Lionsgate board and firmly behind current management. That move pushed Icahn’s 38% stake in the company back to 33.5%, and increase Rachesky’s stake from 19% to 29%. Icahn can still gain more shares, as his $7.50 per share tender offer has been extended until November 12. But his 33.5% stake isn’t enough to win a proxy fight.
2ND UPDATE: MGM has just issued this statement about the results of the creditor voting:
“Metro-Goldwyn-Mayer Inc. (‘MGM’) today announced that the secured lenders voting in the Company’s solicitation process have overwhelmingly approved its proposed plan of reorganization (‘Plan’). MGM will now move expeditiously to implement that Plan, which will dramatically reduce its debt load and put the Company in a strong position to execute its business strategy. MGM is appreciative of the lenders’ support.”
UPDATE: The creditors have now officially approved the restructuring plan that puts the Spyglass chiefs atop MGM and gets the studio moving again. A statement will be released momentarily. Now, the fun begins. If MGM isn’t a distributor, the next installment of James Bond will be a jump ball. Expect Sony (which distributed Casino Royale to battle it out with Warner Bros and Fox, but watch Paramount emerge in the thick of it because of the close relationship that the studio has developed with Spyglass since that company became co-financier of Star Trek and the followup that is in the works.
The long-running drama of MGM should play out by tomorrow when creditors decide whether or not to embrace a restructuring package that puts Spyglass partners Roger Birnbaum and Gary Barber in control or instead give the MGM assets to Carl Icahn and Lionsgate. Elsewhere, Miramax Films, the other endless custody battle, is starting to come together. Reports have former News Corp exec Mike Lang in talks to become CEO, and MGM television coprexy Jim Packer also in discussions to take a post. All this is contingent on the sale of the company by Disney to Filmyard Holdings that takes place at year’s end. That purchase is backed by Ron Tutor and Colony Capital.
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 …
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)
Lionsgate is making its argument for a merger with hobbled studio MGM, a move that is supported by Carl Icahn, who has been trying to take over the mini-major while simultaneously buying up MGM debt. The timing is meant to provide an option for the current restructuring plan that will be voted on by MGM lenders this month. That plan would revive the Lion most likely as a production entity without distribution and marketing, headed by Spyglass chiefs Roger Birnbaum and Gary Barber. I’ve always thought the plan before creditors right now is an interim step, and that an alignment between the Lion and Lionsgate, or a studio like Warner Bros will happen down the road regardless, once the studio gets moving again on The Hobbit and James Bond. Here is Lionsgate’s release:
SANTA MONICA, CA, and VANCOUVER, BC, October 13, 2010 — Lionsgate (NYSE: LGF) (“the Company”), the leading next generation studio, today emphasized the value creation potential of its proposed merger combination with Metro−Goldwyn−Mayer Studios Inc. (“MGM”). The Company filed an Amendment to Schedule 14D-9 with the Securities and Exchange Commission yesterday disclosing that it sent an October 11 proposal to MGM regarding a potential business combination between the two companies. Under the terms of the proposal, the combined company would be owned by shareholders of Lionsgate and creditors of MGM.
“This is a unique, once in a lifetime opportunity to create a dynamic, forward-looking studio that unlocks
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 …
EXCLUSIVE: Despite the speculation that India conglomerate Sahara India Pariwar might swoop in and buy MGM for $2 billion, it doesn’t sound like MGM’s current management is taking it that seriously. At least not based on this internal memo I just obtained:
We wanted to take this opportunity to provide you with an update on the Company’s restructuring efforts. Recently we announced that our lenders have again agreed to extend the forbearance period relating to certain of our debt obligations and we are appreciative of their ongoing support throughout this process.
We recognize that throughout this restructuring process, there has been a great deal of speculation about the Company’s future in the media and elsewhere which can be very distracting. We appreciate the focus, hard work and dedication you all have demonstrated for the last year. We can assure you we are working to bring this process to a conclusion as quickly and thoughtfully as possible. However, the process is still evolving and we appreciate your understanding that there are not a lot of definitive answers at this stage.
In the latest evolution of this process, we have entered into a nonbinding letter of intent with Spyglass Entertainment’s Gary Barber and Roger Birnbaum to become the co-chairmen and co-chief executive officers of MGM upon consummation of a restructuring. We believe this development is a constructive step toward concluding this process. The Company will be working with Messrs. Barber and Birnbaum
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.
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 …