Update – 9/20 2:50 PM PST: The MGM soap opera just gets curiouser and curiouser. A spokesman for the Broccoli’s ION Productions told the LA Times of the company’s reported alignment with potential suitor Sahara India, “We have no involvement with them whatsoever.” This completely discredits Bloomberg News’ report which is somewhat shocking considering the sterling reputation of the financial news outlet. Either Bloomberg’s reporter misunderstood their source or something very fishy is going on. More on this intriguing story as it develops.
It’s hard to believe, but as a slew of major deals have come and gone over the past year MGM’s fate is still dangling in the air. Disney sold Miramax in less than eight months (assuming the money actually came in), Overture Films’ assets were purchased by Relativity in less than seven months and Apparition pretty much came and went as an independent distributor. And still, the fate of one of Hollywood’s most prestigious and oldest studios is still unclear.
Before this morning, it was expected MGM’s creditors would vote on a proposal that would find Spyglass Entertainment toppers Gary Barber and Roger Birnbaum heading a debt-free company that would essentially be scaled down to a production label. Moreover, there are reports the two longtime producers have a $4.3 million kill fee if the deal doesn’t go through by a certain date. Now, a duo who control arguably MGM’s most prized assets are getting into the mix.
James Bond producers Barbara Broccoli and Michael G. Wilson have been relatively quiet since MGM’s dire debt crisis reached a tipping point last year except for publicly announcing they had stopped development of a 23rd 007 film in April. Today, they have aligned themselves with a potential new suitor for MGM, Sahara India, a UK investment company that has offered $2 billion against the Lions’s $3.7 million in debt. Side by side, this would arguably be a better deal for MGM’s creditors who will have to take a bigger short-term loss in the Spyglass deal.
Why the Bond producers have waited this long to join forces with Sahara is somewhat strange, but it certainly isn’t a ringing endorsement of the Spyglass duo. And while business is business, it could mean tense times ahead when the new MGM toppers want to get moving on a new Bond film. You have to wonder if this gives Barber and Birnbaum pause about moving forward with their potential merger. It’s never good when your cash cow isn’t interested in working with you.
What is not being reported by other media outlets is that Sahara India had already been in contact with MGM’s creditors about a potential acquisition for some time, but they didn’t have the financing secured to make an adequate bid. In fact, they still may not completely secured it, but having the Broccoli’s on their side may give them the leverage they need to wrap up their round. Unfortunately, there is a ticking clock with the Spyglass duo and MGM’s current creditors are not Hollywood savvy. Many feel they have already blundered and wasted better opportunities for the asset over the past year. So, they may just want to finally put this to bed no matter what the long term ramifications with the Broccoli’s. Plus, still looking on the outside in is Warner Bros. who are rumored to be sweetening their initial lowballing bid of $1.2 billion at the last minute.
The ramifications of whether the Spyglass duo or Sahara India come on board actually has lasting implications in Hollywood. Spyglass means a round of massive layoffs, fewer projects (less money being spent in the creative community) and a theatrical distribution and marketing deal with another studio such as Paramount or 20th Century Fox. In theory, Sahara means a reinvigorated studio that might not be a major, but could make an impact in the market place such as Lionsgate or Summit Entertainment have. It would also mean more films and new projects which means more jobs throughout the greater LA area. Win, win, no?
Of course, the most surprising thing about the entire MGM mess is that it’s still unresolved. And for those dwindling moviegoers who actually have an interest in seeing “Red Dawn” or “Cabin in the Woods”? Well, your guess on when they will hit theaters is as good as the MGM executives hanging out in limbo in Century City. Because, trust me, no one wants this to end more than them.