Business Week – Metro-Goldwyn-Mayer Inc. is asking suitors to submit new bids for the studio by mid-March, about two weeks before its respite from interest payments expires, according to three people with knowledge of the situation.
Billionaire Len Blavatnik’s Access Industries, Time Warner Inc., Lions Gate Entertainment Corp. and Liberty Media Corp. are among the potential buyers examining MGM books, said one of the people, who requested anonymity because the talks are private.
MGM, distributor of the “James Bond” movies, is exploring a sale after failing to make payments on $3.7 billion in debt. Suitors are trying to assess the value of MGM assets that include a 4,100-movie library, future “Bond” movies and rights to co-distribute films based on J.R.R. Tolkien’s The Hobbit.
“It’s an old library,” said Matthew Harrigan, a Denver-based Wunderlich Securities analyst who follows entertainment companies. “Just about the only thing that has had significant value over the last five years is the Bond franchise.”
No firm date for the second-round bids has been set because the suitors are still seeking information from the Los Angeles-based studio, which was taken private for $5 billion by buyers including Providence Equity Partners in 2005.
Non-binding first-round bids approached $2 billion, contingent on due diligence, two of the people said. A lenders’ forbearance agreement is set to expire on March 31. They have extended the payment moratorium from the original Dec. 15 deadline to give the studio more time to consider offers.
MGM spokeswoman Susie Arons declined to comment. Peter Wilkes, a Lions Gate spokesman, didn’t return a call seeking comment. Courtnee Ulrich, a spokeswoman for John Malone’s Liberty Media, didn’t respond to a request for comment.
Stewart Till, chief executive officer of Access Industries’ Icon film distribution business in London, said in an earlier interview the company has the wherewithal to be a potential bidder for major entertainment properties.
Providence, in Providence, Rhode Island, has a 29 percent stake in MGM, while TPG, based in Fort Worth, Texas, has 21 percent. Sony Corp., the Tokyo-based owner of Columbia Pictures, and Comcast Corp., the largest U.S. cable TV company, each own 20 percent. DLJ Merchant Banking Partners has 7 percent, and Quadrangle Group owns 3 percent.
Valuing a library is a lengthy process because each film must be examined to assess revenue potential and to determine who may have a contract to share in profit or distribution rights, analyst Harrigan said.
“You need a ridiculous amount of detail,” said Harrigan. “You look at every movie to see what you can get.”
Time Warner, New York-based parent of the Warner Bros. studio, gained 18 cents to $28.86 today in New York Stock Exchange composite trading. Vancouver-based Lions Gate, maker of the Saw movies, added 7 cents to $5.41.
New York-based Access Industries owns a stake in Top Up TV, a U.K. pay television service, along with the Russian TV company Amedia, and in 2008 acquired control of the U.K. arm of actor/director Mel Gibson’s Icon Productions Inc., the U.K.’s Daily Telegraph reported at the time.
Liberty Capital, one of Englewood, Colorado-based Liberty Media’s tracking stocks, rose $2.44 to $34.20 on the Nasdaq Stock Market. The company is evaluating options for its movie production unit, Overture Films.
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