Industry executives are stunned that Amazon is negotiating to buy Metro-Goldwyn-Mayer in a deal that could reach $ 9 billion. Their shock comes from the belief that the price dramatically overstates the studio behind James Bond, The Pink Panther and “Legally Blonde”.

Other companies launched the tires on MGM at various times during a stop-and-start sales process that had dragged on for months. Industry insiders say the studio’s true value is more in the $ 5 billion to $ 6 billion range with some debt taking over. Even then, they doubt that MGM’s prize asset, its stake in franchise 007, can be properly monetized.

This is because of the unprecedented creative control held by Eon Productions and its owner, the Broccoli family, who are the custodians of the film series that dates back to Bond’s first screen appearance in 1962 “Dr. No. ”Under an agreement first entered into by Albert“ Cubby ”Broccoli, MGM has the right to fund and distribute all Bond films and share the profits with EON. However, Broccoli’s heirs and Eon bosses Barbara Broccoli and her half-brother Michael G. Wilson always have the final say on everything from the film’s marketing and distribution plans to who will slip into Bond’s tuxedo when Daniel Craig hangs up the phone. role.

Insiders believe Broccoli and Wilson would likely cancel any plans to launch Bond films on Amazon Prime Video’s streaming service and insist on a theatrical release, as is their contractual right. It was a key stumbling block when MGM briefly raised the possibility of selling the COVID-delayed Bond sequel “No Time to Die” to Apple for north of $ 600 million. Producers have also been reluctant for Bond to appear in spinoffs or TV shows, the kind of ancillary properties that could prove to be very lucrative. Additionally, the movies have been licensed extensively to cable networks and streaming platforms, which could complicate matters.

“If Barbara doesn’t agree with that, things could be very difficult,” says an executive who has worked on the Bond films.

In addition, the franchise is in transition. Craig is stepping down from the role after five films, and there are real concerns that his brave womanizer character may not resonate as much with the younger generations. This is problematic given that much of MGM’s value rests on Bond which continues to win over audiences for years to come.

But MGM’s brass do not seem discouraged. Two weeks ago, Michael De Luca, chairman of the company’s film group, and other executives made an official presentation to Amazon. The PowerPoint was viewed by Mike Hopkins, senior vice president of Amazon Studios and Prime Video, who is an advocate for the deal. One in the know said the parties are in an exclusive negotiating window.

Representatives for Amazon and MGM did not immediately respond to requests for comment.

Other companies have taken this route with MGM before the negotiations collapsed. MGM was speaking to Apple in early 2020 before COVID upset the landscape, and other legacy studios have been looking into the business.

Timing can work to MGM’s advantage. AT&T is in the process of creating WarnerMedia and combining it with Discovery, dramatically improving that company’s content offerings at a time when it tries to attract more subscribers for HBO Max. This could leave other competitors looking to buy from content producers, and MGM, along with Lionsgate and AMC, is one of the few digestible media properties that could be offered.

The sale process has been intermittent because board chairman Kevin Ulrich, of which hedge fund Anchorage Capital is a major shareholder, is not convinced he wants to sell even as other MGM investors do. pressure him to cash at a time when the streamers are looking. to strengthen their arsenals of content.

Goldman Sachs, JP Morgan and Morgan Stanley have represented MGM on several occasions over the past few years and the whole process has been ‘bizarre’, according to an insider, due to a combination of aggressive bankers and agendas investors different.

“It’s like people say, ‘My house is not for sale, but what would you pay me for it? Oh no, it’s not for sale, ”as one person described it.

Under De Luca, MGM’s film side made the kind of dazzling acquisitions that could position it for a sale, lining up projects like “Soggy Bottom” by Paul Thomas Anderson and “House of Gucci” by Ridley Scott. Sources said the $ 9 billion valuation relies heavily on MGM’s next slate generating solid box office returns and TV licensing revenue.

The real value of MGM is its library, even though it has been widely used. The company has 4,000 film titles, including classics and hits such as “Four Weddings and a Funeral”, “The Silence of the Lambs”, “The Bird Cage” and “Stargate”. Many of his most popular films, such as the “Rocky” series, have already been rebooted as “Creed” films, or failed to be relaunched, as was the case with “Ben-Hur” and ” RoboCop ”. Other franchises, such as “The Hobbit” by Peter Jackson, have ended.

The company enjoyed success on television, producing films like “Fargo” and “The Handmaid’s Tale,” as well as in the unscripted field with “The Voice” and “Survivor,” but rival studios were still amazed by the price of $ 9 billion. label. Sources noted that four years ago Amazon paid $ 13.7 billion for the entire Whole Foods supermarket chain, just a few billion more than it could pay for MGM.

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