1. Liberty Media, Elliott said to drop from MGM bidding

    By Devin Zydel on 2010-03-17

    Business Week – John Malone’s Liberty Media Corp. and hedge fund Elliott Management Corp. have decided not to bid for the Metro-Goldwyn-Mayer Inc. movie studio, according to people with knowledge of the bidding.

    MGM’s value fell below a price Liberty executives believed would be acceptable to the Los Angeles-based studio’s creditors, said two people with knowledge of the Englewood, Colorado-based media company’s plans. New York-based Elliott, working with producer Ryan Kavanaugh’s Relativity Media, also pulled out, said two people, who sought anonymity because talks are private.

    The thinning field of potential buyers lessens the chance of a bidding war for the studio, which stopped making payments on $3.7 billion in debt and put itself up for sale last year. Others exploring a second-round bid included billionaire Len Blavatnik’s Access Industries, Time Warner Inc. and Lions Gate Entertainment Corp., people close to the process said on Feb. 3.

    Metro-Goldwyn-Mayer has set a March 19 deadline for formal offers.

    Courtnee Ulrich, a spokeswoman for Liberty, declined to comment. Scott Tagliarino, a spokesman for Elliott, declined to comment. Mara Buxbaum, a spokeswoman for Los Angeles-based Relativity, didn’t immediately respond to an e-mailed query.

    Metro-Goldwyn-Mayer’s $3.7 billion term loan was priced at 54 cents on the dollar today, down from about 55.5 cents early yesterday, according to two people familiar with the market who declined to be identified because the trading is private.

    Recovery Value

    The trades imply a recovery value of $2 billion, down from $2.41 billion on Jan. 4, when the loan traded at 65.25 cents.

    In 2003, Malone withdrew from bidding for Vivendi Universal’s Los Angeles-based operations, including the film studio and theme park. Liberty, owner of the Starz Entertainment pay television service, is evaluating options for its three-year old movie-production unit, Overture Films.

    Liberty’s Starz tracking stock dropped 28 cents to $51.81 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have gained 12 percent this year. Liberty Capital rose 60 cents, or 1.8 percent, to $34.85 and is up 46 percent this year. reported the departure of Elliott and Relativity earlier.

    In addition to the bidders, News Corp., parent of Twentieth Century Fox, and Qualia Capital LLC, led by Amir Malin and Ken Schapiro, have each proposed restructuring Metro-Goldwyn-Mayer’s debt and injecting cash to recapitalize the company, people with knowledge of the process said in January.

    New York-based Qualia’s proposal would involve a $500 million cash infusion to fund operations, and the conversion of some debt to equity, one person said then.

    Library, ‘Bond’

    MGM, created in 1924, owns a film library with 4,100 titles, and controls rights to the James Bond franchise. It released one picture in 2009 and has a co-production deal with Warner Bros. on the planned film The Hobbit, based on the J.R.R. Tolkien novel. Hot Tub Time Machine is set for release on March 26.

    Sony Corp., which co-produced and distributed the two most recent Bond films, is interested in distributing future ones or becoming a production partner to MGM or its new owners once a sale is completed, Sony Pictures Entertainment Chairman and Chief Executive Officer Michael Lynton said this week.

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