Unleashing the Lion
Changes are afoot at MGM and the focus is finally clearing up. As pointed out by The Hollywood Reporter,
"Hollywood's once-mighty lion is, in fact, owned mostly by equity investors, including Providence Equity Partners (29%), Texas Pacific Group (21%), DLJ Merchant Banking Partners (7%) and Quadrangle Group(3%). Sony and Comcast each have a 20% stake. MGM has a distribution partnership with Sony that covers films produced by MGM that originate from the library, like the upcoming Bond installment 'Casino Royale.'""However," as noted in Variety, "a clause in the [acquisition agreement] will allow MGM to become an independent distributor and cease its arrangement with Sony in April [2005], if the company chooses."
First, MGM hires Harry Sloan as chairman and CEO in October of last year, who announced his intentions to beef up production activities. Then, it's announced that Rick Sands will be moving into the COO spot, just as Dan Taylor resigns his post as President. So, although the original story behind the transaction was for Sony to mine the value of the 4,000 title library, growing its value through new distribution channels (think VOD and VCast), now's there's an announcement that MGM is looking to become the indie rent-a-system pipeline.
That's right, the studios are consolidating - as Dreamworks moves into Paramount and Pixar makes permanent its Disney pipeline - but smaller players are flush with cash - think The Weinstein Company. In fact, specifically think about Harvey and Bob, because Variety reported that MGM "is close to a deal with the Weinstein Co., and in talks with several production companies, including Lakeshore Entertainment and Bauer Martinez, to forge distribution pacts." It has been reported that any such deals would be non-exclusive and focus MGM on distribution and marketing, without spending its own funds on development or production. The Los Angeles Times gets to the meat of the matter for why anyone would want to distribute through MGM,
"Movies flowing through MGM's distribution pipeline would qualify for the studio's existing pay TV and other ancillary deals in the U.S. and in such foreign markets as Japan, Australia, Latin America, Brazil and Europe. Those deals are financially significant to producers because they can yield tens of millions of dollars that can be used to fund new productions."What's not yet clear is how MGM will work with the Weinsteins on home video, given Genius Products LLC, a joint venture that, according to The Hollywood Report, "will get exclusive U.S. home video distribution rights to all feature films and direct-to-video releases owned or controlled by the Weinsteins." Also afoot is the potential sale of United Artists, after The Times Online reported that MGM has been approached by at least one party with a $500 million bid for the unit, which would be sold with some library titles and, likely, its post-theatrical distribution agreements.