Sony`s MGM buyout deal factsheet

14-Sep-2004 • Bond News

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• Metro-Goldwyn-Mayer Inc., through its MGM Studios subsidiary, is actively engaged in the production and distribution of entertainment products, including motion pictures, television programming, home video, interactive media, music and licensed merchandise.
  
• The company owns the largest modern film library in the world, consisting of about 4,000 titles.
  
• It also has ownership interest in international television channels reaching more than 100 countries.

• Sony has agreed to pay $12 a share for MGM, 45 cents more than MGM's closing price of $11.55 Monday on the New York Stock Exchange.
  
• The deal also calls for Sony to assume about $1.9 billion in MGM debt.
  
• The sale would mark the third time billionaire investor Kirk Kerkorian has sold the film studio, once best known for its musical hits such as "Singing in the Rain" and "Meet Me in St. Louis."
  
• Kerkorian, through his Tracinda Group, owns 74 percent of MGM's outstanding shares. The sale to Sony would net him about $2.1 billion.

• Sony is expected to shutter MGM's current production, with the possible exception of the "James Bond" franchise. MGM also produces films under the United Artists label.
  
• MGM has a considerable library of more than 4,100 titles, including the "Pink Panther" and "Rocky" franchises. Analysts have estimated MGM's library will generate $440 million in cash flow in 2004 by exploiting only 1,500, or about 36 percent, of its titles on the newer DVD format.
  
• Sony has also approached cable television giant Comcast Corp. about becoming a minority investor in the new company after the Sony/MGM deal closes, according to a source familiar with those discussions.
  
• The source said Comcast and Sony have reached a deal to distribute Sony's Columbia/Tri-Star film library on Comcast's video-on-demand platform. That deal could expand to include MGM's library of films and result in Comcast making an investment in the new company.

• Sony's winning bid comes after Time Warner Inc. dropped out of the competition earlier Monday.
  
• Time Warner had been seen as the front-runner for MGM going into the weekend. But Sony raised its offer, setting off a bidding war that Time Warner concluded it did not want.
  
• Time Warner Chairman Dick Parsons aid, "Unfortunately, Time Warner could not reach agreement with MGM at a price that would have represented a prudent use of our growing financial capacity."
  
• He also hinted that the cash it saved from the MGM bid could be used to bolster its cable presence.
  
• Time Warner is known to be interested in bidding on the cable assets of bankrupt Adelphia Communications Corp.