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Lions Gate (and every other media company) says it would buy MGM at right price

So, tell us something we don't know. In other words, what media company wouldn't be interested in buying MGM -- whose 4,000-title movie library includes valuable rights to the James Bond franchise and J.R.R. Tolkien's classic "The Hobbit" -- at a bargain-basement discount?

When asked at an investment conference today in New York whether Lions Gate Entertainment would be interested in buying the beleaguered MGM, vice chairman Michael Burns said it would -- but only if the price is right.

"It's all about price," Bloomberg quoted Burns telling investors, adding, "We'll know sooner rather than later" what it's going for. Given MGM's financial straits, Hollywood insiders peg its value at between $2 billion to $2.5 billion, a steep decline from the $5 billion that a group of investors paid for the studio several years ago.

When Company Town followed up and called Burns, he simply said, "Obviously, we'd look at any complimentary asset at the right price where we can leverage our infrastructure."

Lionsgate, the Santa Monica movie and television studio behind the "Saw" and "Tyler Perry" movie series and "Weeds" and "Mad Men" cable shows, has also in the past shown strong interest in buying Summit Entertainment, the studio behind the "Twilight" franchise.

MGM, which for months has been struggling to restructure $3.7 billion in debt, is expected to go on the auction block officially in the near future.  But so far, Lionsgate and presumably other potential bidders haven't been shown the numbers.

Many in Hollywood are betting that the winning bidder will be Time Warner, flush with billions in cash after spinning of its cable systems. Before MGM was sold to a consortium of investors, including private equity firms, Sony Corp. and Comcast Corp., Time Warner -- which owns Warner Bros. -- was on track to buy it.

It would also make sense because Warner Bros.' New Line Cinema unit plans to co-produce two "Hobbit" movies with MGM.

News Corp.'s 20th Century Fox, which distributes MGM's movies on DVDs around the world, would also be a logical buyer. News Corp.'s got a lot of cash, too.

Last month, MGM's lenders agreed to let the studio forgo its next three interest payments until Dec. 15.

The clock is ticking.

-- Claudia Eller

Comments () | Archives (2)

I'm so distressed with the dirty banker's - they have messed up America and now Hollywood! How on earth can this happen to American history! The lion is part of hollywood, the dirty bankers have no knowledge of the movie industry, they have not invested in this legendary company and only pocketed the profit . Now they will pay for running this gem into the ground. So sad, if only someone can see that to drive the amazing library they need to make the strong blockbusters they have on a slate.

I'm not sure Obama's Justice Department would let Time Warner buy anything other than The Hobbit; despite their owning the pre-1986 MGM catalog, it would only make Hollywood's biggest studio even bigger, perhaps too big. (The Hobbit is different as they're already involved with it.) Sony already let MGM go; they're not going after it again; same for Comcast plus they're buying NBCU. I say Fox buys the library along with all film rights other than The Hobbit (i.e., James Bond).

OTOH, I think Lionsgate will get the MGM brand--name, Leo, etc. It's synergistic with their existing brand, and will instantaneously move them from indie to major; they're already bigger than MGM. Others will pay more for the library & film rights, but the brand's worth more to Lionsgate; considering what many majors are doing with their indie & genre-film brands, they won't need another brand name enough to pay for it. (Of course, that won't affect MGM Mirage's interest in the brand; since Kirk Kerkorian lost his majority interest in MGM Mirage earlier this year, he won't go after the brand either.)


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