Time Warner said to plan $1.5 billion MGM studio bid

BusinessWeek – Time Warner Inc. plans to bid $1.5 billion for the Metro-Goldwyn-Mayer Inc. film studio, according to a person with knowledge of the decision.

The owner of the Warner Bros. movie studio intends to put in the second-round offer today, said the person, who declined to be named because the talks are private. MGM said today it received several bids and will seek additional delays on interest payments.

Bids must be high enough to win over MGM’s creditors, who may restructure the studio’s debt instead. John Malone’s Liberty Media Corp. and hedge fund Elliott Management Corp., working with Relativity Media, decided not to bid, people with knowledge of the situation said March 17.

MGM, distributor of the James Bond films, put itself up for sale last year after failing to make interest payments on $3.7 billion of debt. The Los Angeles-based studio owns a 4,100-film library and has a co-production deal with Warner Bros. for movies based on J.R.R. Tolkien’s novel The Hobbit. The studio was taken private for $5 billion in 2005 by buyers including Providence Equity Partners.

New York-based Time Warner was considering a bid of $1.2 billion to $1.5 billion, with Warner Bros. executives pushing for the higher end of the range, people familiar with the matter said March 18.

Time Warner, which also owns CNN and HBO, rose 4 cents to $31.28 today in New York Stock Exchange composite trading. The shares have gained 7.3 percent this year.

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