Sunday, 24 August 2008

Hollywood Babble On & On #154: Will the Lion Choke Instead of Roar?

There are reports going around that Goldman Sachs is shopping around MGM/UA for another round of musical owners.

If it's true, then get out your burying shovels, because the company will be well and truly dead.

The report's say the current ownership consortium is looking $5 billion to unload the company, because they went to all the trouble of getting the company, while not having a real plan for what to do once they actually owned the company.

MGM/UA has two tangible assets.

The biggest is a massive film library, consisting of films made by MGM, United Artists (natch), Orion, American International, Filmways, Samuel Goldwyn, Cannon Films, Polygram Filmed Entertainment, ITC Entertainment, Atlantic Releasing, Hemdale, and about half a dozen other smaller companies.

That's a spicy meatball, of literally
thousands of films and television shows, a big asset in an era of 5000 channels with nothing on but the same movies replayed on a weekly basis.

MGM/UA's second most tangible asset is its distribution. It can get films into theatres nationally, and has an international output deal with 20th Century Fox. The international deal was necessary since MGM/UA pulled out of UIP it's international distributor co-owned with Paramount and Universal.

The problem with MGM/UA is that it's not making any new films to distribute outside of co-producing Bond movies with Sony. It just doesn't have the filthy lucre in the kitty to get its own flicks made and released. And a film company that doesn't make movies isn't really a film company, it's just a name on an office door.

Kirk Kerkorian has offered to buy MGM/UA for $3 billion, but that offer was rejected. I'm sure Kerkorian's a lovely guy and all, but his obsession with owning and selling MGM over and over again just isn't healthy. I suggest that he take a break from buying MGM for a while.

Now I think I know what can be done.

Sony covets the MGM/UA library for it's Blu-Ray discs, and sure, Blu-Ray is the the winner of the hi-def war and they don't need to directly control it anymore, but the library is a valuable asset, so here's my proposal.

- Sony keeps the library.

- Sony keeps James Bond.

- Sony keeps Tom Cruise.

- Sony restructures the company as a distributor of films and DVDs called United Artists.

A new consortium of the major independent film production companies, and film investment funds, can then purchase the company at a reduced price. This makes sense outside of the snakepit of my mind because a lot of these companies and equity investors are being screwed by the big-boys. So why not have their own distributor with, most importantly,
their own accountants. Also they can fulfill certain niches that are opening in the film business.

- Lionsgate, the current champion in independent distribution, is stepping away from distributing films for a fee or percentage, preferring to focus on their own productions. This new United Artists distributor can fill this gap, and since Warner Bros. is shopping around their extra films in the wake of the assimilation of New Line, they can fill a slate pretty quickly.

- Despite their profitability, Lionsgate is also stepping away from the low-budget horror and comedy films that made their name, aiming for more "mainstream" fare, and hopefully some award nominations. This new United Artists company can't afford to be mainstream, it can use these films to make relatively quick money, and fill their coffers, and have a relatively reliable revenue stream.

I'm starting to think that MGM as a brand name, is dead when it comes to new movies, and that this new program, with a new company, is the only way to go.

And if the new owners need someone to run it, then they know where to find me.



UPDATE: According to Nikki Finke MGM's honcho denies that the company is up for sale. Though this development doesn't mean that they don't have to do something drastic to revive the long moribund studio.

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