NEWS

WHAT'S ON TV NOW

Recorded   Latest Recorded Program Feeds Click for more recently recorded TV feeds Kayotix's latest Audio Demo Sample CD Now Shipping. Click Here to order your free copy !

Sony Buy MGM 17.09.04(BBC News 24) close X Running Time Approximately: 4 minutes Playlist Order: [N/A] Sony set to boost film library with MGM bid Original Source: Guradian.co.uk Sony, the Japanese electronics and entertainment group, emerged this week as the likely victor in the battle to acquire Hollywood film studio Metro-Goldwyn-Mayer in a deal worth about $4.8bn (£2.7bn). The deal may still be in its early stages, but the business pundits agreed that it is all but guaranteed to go ahead, especially after Time Warner - the only other serious contender in the fight for MGM - withdrew its own, lower offer of $4.6bn on Monday. Time Warner backed down "after concluding a higher price would not be prudent", reported the Financial Times. Sony had been in talks with MGM for the past six months, but "it had been overtaken by Time Warner in recent weeks" and the latter's unexpected departure from the contest was something of a "dramatic turnaround", the FT noted. MGM, which enjoyed a golden era in the 1930s with films including Gone With the Wind and the Wizard of Oz, is a particularly valued asset, thought Charlie Gibson in the London Evening Standard. It may turn out unexceptional "low-cost" films and TV shows today, but "the jewel in the crown is its massive library of more than 4,000 films which include the James Bond, Pink Panther and Rocky series. These alone could generate more than $400m [£225m] in cashflow in 2004 on the new DVD format," Gibson said. So why did Time Warner, which many predicted would walk away with the MGM prize, pull out at the last minute? MGM's film library may amount "to a store of real value by any definition", conceded Patience Wheatcroft in the Times, but Time Warner has a poor track record as far as mergers are concerned. The company "once confused real value with internet mirages and frittered away hundreds of billions of dollars through its merger with AOL. Regularly reminded of how that deal damaged the company, Dick Parsons, Time Warner's chairman and chief executive, has balked at the price demanded by MGM." Dan Ackman, writing for Forbes.com, was one of the few commentators who doubted the attractiveness of MGM in the first place. "Why would anyone even imagine a bidding war for MGM," he asked. It has lost money for the past three years, "it didn't have a single movie in the top 50" in 2003 and even its much-touted film library will only bring "fairly predictable" revenues, Ackman warned. Nor should Sony rely on James Bond to fill cinemas in the future, as "007's best days, both critically and commercially, were in the 1960s". One hurdle that Sony must still overcome is the task of keeping "its collection of partners in line", cautioned Wheatcroft in the Times: Sony "is backed by a couple of private equity firms", which jointly financed the bid, and these must be kept on board while the details of the deal are worked out. The FTs's Lex column also warned that this mix of "industry and finance bedfellows have to get along ... While involvement of its [private equity] partners should act as a financial safety net, it also risks entangling Sony in a sticky web of commitments." Another party involved in Sony's bid was Comcast. The cable operator was an "unexpected twist", noted Andrew Ross Sorkin in the New York Times. Comcast joined Sony's consortium as a "strategic partner and a possible investor. Sony's deal with Comcast opens the possibility that they may create a new premium cable television network, like HBO ... which broadcasts both Sony and MGM movies." There was some concern that Kirk Kerkorian, MGM's controlling shareholder, could scupper the deal at the last minute. Sony may be in "pole position", wrote Katherine Griffiths in the Independent, but the deal still "hinges on the wishes" of Mr Kerkorian, who "has a history of selling his stake in MGM, only to buy it back later. Since 1970, when he first bought a controlling share in MGM, the 87-year-old has sold the business twice". But this didn't concern Paul Tharp in the New York Post. Thanks to Mr Kerkorian's other "mega-deals", involving his casino empire, this has been "the most lucrative year of his colourful life" and he has "nearly tripled his personal fortune".

More ...