Sony President defends MGM purchase

16-Sep-2004 • Bond News

Sony Corp. President Kunitake Ando defended the Japanese electronics and entertainment giant's decision to buy Metro-Goldwyn-Mayer Inc. as financially sound Thursday, but acknowledged he was relieved Time Warner dropped out of the bidding, reports the Associated Press.

"We had decided on a limit, and we were definitely not going to push beyond that if it went above that," he told a group of reporters on the sidelines of a Tokyo marketing convention. "To be honest, we were relieved Time Warner withdrew first."

On Monday, Sony announced an agreement for a Sony-led consortium to buy the Hollywood studio in a US$3 billion deal that would add more than 4,100 movies, including the James Bond series and "Rocky," to Sony's library.

Time Warner had initially been seen as the front-runner to acquire MGM, but Sony raised its offer, setting off a bidding war that Time Warner concluded it did not want.

MGM said its management will recommend the proposed merger to its board by Sept. 27. The sale is also subject to regulatory approval.

Ando refused to give further details until a final deal is reached.

Analysts have questioned the ability of Sony to cash in on the movie deal to boost its core electronics business at a time when the Tokyo-based company is struggling to ward off cheaper rivals amid intensifying global competition in audio and digital products.

Ando said the value of possessing entertainment content is growing because of booming DVD sales around the world, the popularity of digital movies as well as multichannel cable TV in the United States.

"The importance of expanding our film business and library in the long term is something we have been thinking about for a long time," he said.

Thanks to `JP` for the alert.