Last week there was the possibility you could go out and spend a few tens of millions to buy yourself the Terminator franchise, as it’s now up for auction, but if you’ve got a few billion, you may now be able to buy an entire studio. As we’ve been reporting over the last few months, MGM is in serious financial trouble. With $4 billion in debt and severely limited cashflow, the venerable studio has been on the verge of bankruptcy.
The companies (including Sony) who bought MGM a few years ago have already had to write off their $5 billion investment, as it became clear a while ago that the people who now really owned the studio were the creditors. MGM itself has gamely tried to struggle on, agreeing a deal to defer interest payments so it can try to sort things out, but it now looks like the game is up, as despite the reprieve, things are still bleak on the money front.
Variety reports that they have several inside sources that say MGM will now be auctioned off in the next few weeks, with the studio’s creditors trying to minimise their losses in what seems to be turning into an ever growing spiral of losses for them. The most likely route will be to split it all up, selling the studio name and logo separately to the film catalogue, while another deal could be struck for the United Artists brand.
However with the exception of the Bond franchise – which might be sold separately anyway – many see most of the films that MGM owns as being of little value (they lost most of their classic titles, like Gone With The Wind and Wizard Of Oz, to Warner in the 1980s), with some suggesting that all the assets the studio owns might only be worth $1.5 billion in the current market, no matter how they’re packaged. It’d be a massive loss for the creditors, but it seems they and the corporate restructuring specialists brought in to try and save the studio, don’t think there’s any way to turn the situation around, and so this is the best option.
However there’s still the chance another studio may come in and buy the whole thing, with Warner being seen as the most like suitor.
As yet, the plan to sell off MGM still needs to be approved by two-thirds of the creditors, and there’s also the possiblity they may try to put the company into bankruptcy in order to save it, but it’s certainly looking like the most likely route at the moment is to break it up and sell it off.
If you’re worried about the future of James Bond or The Hobbit, dont. Bond will go on, even if another studio buys the franchise, and Warner has already made arrangements to protect the Hobbit movies from whatever happens to MGM. It’s just a shame that once again, the studio that was once the biggest in the world, has been brought to its knees.