Reuters news is reporting today that Japan’s Sony Corp. and two U.S. buyout firms are in advanced talks to buy U.S. film studio Metro-Goldwyn-Mayer Inc. for about $5 billion.
Sony initiated the talks because it wanted access to MGM’s 4,000-plus film library that includes the James Bond and Pink Panther films and numerous Oscar winners. Libraries provide steady revenues from sales of DVDs, videos and TV licensing.
According to other published reports, under the proposed deal, only the studio’s best-known film series, like James Bond, would continue to be produced under the MGM brand.
Some analysts saw the news as an opening round in a new bidding war for MGM and most noted that talk of an MGM sale has surfaced often. The studio is 74 percent-owned by 86-year-old billionaire Kirk Kerkorian and his Tracinda Corp investment firm. He bought MGM for $1.3 billion in 1996 for a third time.
The buyout firms joining Sony are Texas Pacific Group and Providence Equity Partners, sources said. The three are expected to split a cash investment of $1.5 billion and borrow the balance. MGM has hired investment bank Goldman Sachs to represent it, said sources who knew of the deal.
“I wouldn’t take (talk of a deal) as gospel,” said David Miller, an analyst with Sanders Morris Harris. “This is kind of an opening round in a long, protracted negotiation.” He put MGM’s share value at close to $22.
In 1997 Sony made a disastrous attempt to start a rival James Bond series with rights acquired through Thunderball/Never Say Never Again producer Kevin McClory. MGM sued and the case was settled out of court with MGM retaining all original rights to the cinematic James Bond, as well as acquiring the disputed rights and Sony/Columbia’s long held rights to Casino Royale. Sony then attempted to launch its own super-spy franchise with 2002’s xXx starring Vin Diesel.
If this sale succeeds, Sony will at last own a part of the James Bond franchise.
Read the complete Reuters news article here: EXCLUSIVE – Sony, others eye $5 bln bid for MGM – sources