...and so it begins.
Hired back in May by the beleaguered studio, investment bankers Moelis & Company have started sending non-disclosure agreements to possible bidders. Upon signing their name on the dotted line, interested parties will get a look at MGM's books via a "virtual room" that will be set up by the banking firm online.
So what's at stake? A hell of a lot. While bits and pieces of MGM have been sold off over the years (the most notable is Time Warner's purchase of the pre-1985 catalog via their acquisition of Turner Broadcasting in 1996) they still have a lot of valuable properties in their stable. The highly lucrative Bond franchise, the always rebootable and audience friendly "Pink Panther" series and half-ownership of the forthcoming "The Hobbit" films (New Line owns the other half) are the biggest jewels bidders will be eyeing. In addition, there is a 4,000 strong library of films (including titles from Orion, American-International and the old Samuel Goldwyn Company, plus video rights to titles from Embassy, Castle Rock and Selznick International); the logo, and control of United Artists operations.
Of course, this all comes with a price tag, and $1.5 billion is believed to be the asking price, with bidding expected to go up to $2.5 billion. Time Warner are considered to be the front runner, with about $9 billion in cash currently to spare. In addition to already owning the aforementioned pre-1985 catalog, they are also the only studio other than MGM to have released a Bond film (1983's "Never Say Never Again"). In addition, they are currently working with MGM on a special project that will "make some of the greatest movies of all time available in the digital space" as part of the studio's 85th anniversary.
But anything final probably won't be formalized until spring 2010. MGM's debtholders have given the studio until January 31st to review all their options which may even see the studio returning to operating on their own, though as they are currently saddled with $3.7 billion in debt, we don't see it happening.
How will this affect "The Hobbit" films? It's hard to say. As we reported just a few hours ago, the first script is finished and the next one is being penned as we write this, but if another studio buys MGM outright, it's not unreasonable to assume that they might put the estimated $300 million dollar budgeted films on temporary hold while they get an understanding of where the money is going. Then again, they likely don't want to delay the planned schedule, either. Though there's no doubt the first film alone will break the franchise even, whose to say what another studio will want to do once they get (partial) control of one of the most lucrative franchises in Hollywood.
...and so it begins.