MGM seeks to return to film distribution

Hollywood's lion isn't roaring yet, but it may be purring soon. Entertainment business veteran Harry Sloan, who took over Metro-Goldwyn-Mayer Inc. last fall, is working on plans to rebuild the scaled-back company by returning it to its roots as a domestic theatrical distributor - reports the LA Times.

Sloan is in serious negotiations with several top production entities — and is about to close a deal with Miramax co-founder Harvey Weinstein's new company — to supply MGM with an annual slate of movies.

Sloan wants to bulk up on movies and add fresh titles to MGM's historic library of 4,000 titles with an eye toward increasing its potential sale value. MGM titles include the James Bond, "Pink Panther" and "Rocky" films as well as "Midnight Cowboy" and "Legally Blonde."

Just last week, Sloan hired Chief Operating Officer Rick Sands, who oversaw distribution at DreamWorks SKG and Miramax, to help breathe new life into the moribund studio that is now owned by an investment group that includes Sony Corp. and Comcast Corp.

Although spokesmen for the Century City-based company declined to comment for this report, more than a half-dozen people familiar with the details helped illuminate Sloan's strategy for remaking the studio as a distributor of major releases. They did not want to be identified while the deals were being negotiated.

MGM shut its distribution operation last year after completing its $4.9-billon sale. The historic studio, once known for such classics as "The Wizard of Oz," also pulled the plug on making new movies beyond its deal with Sony to co-finance four or five a year.

MGM intends to relaunch a domestic distribution operation with much less financial risk than it shouldered as a full-functioning studio.

MGM would not immediately fund the development or production of movies, according to people close to the company. People familiar with Sloan's plans said he also was debating whether MGM would invest any money in prints and advertising for its releases.

Sloan and Sands hope to forge deals with four to six well-financed production companies with solid track records that can supply MGM with a consistent slate of movies.

Movies flowing through MGM's distribution pipeline would qualify for the studio's existing pay TV and other ancillary deals in the U.S. and in such foreign markets as Japan, Australia, Latin America, Brazil and Europe. Those deals are financially significant to producers because they can yield tens of millions of dollars that can be used to fund new productions.

MGM expects to announce its maiden slate of movies this month, with hopes of releasing the first picture in early summer.

Under the proposed deal being negotiated with Weinstein — who along with his brother Bob launched Weinstein Co. last fall after a bitter split with Walt Disney Co. — MGM would receive five to eight movies a year. People familiar with the terms added that Harvey Weinstein would continue releasing some movies through his own company, and that films made by Bob Weinstein's sister label, Dimension Films, would not flow to MGM.

Weinstein Co. declined to comment, as did Jim Wiatt, head of William Morris Agency, who has been involved in negotiating the deal with MGM.

MGM also is in discussions with other production entities, among them Lakeshore Entertainment, headed by "Million Dollar Baby" producer Tom Rosenberg. Rosenberg declined to comment.

Sloan was brought in to run MGM by the company's lead investor, Providence Equity Partners, which owns a 29% stake. He has made a career of investing in and building up companies and selling them at a huge premium.

He bought New World Entertainment for $2 million from director Roger Corman in 1983 and sold the company six years later to financier Ronald Perelman for $300 million.

In 1999, as head of European media company SBS Broadcasting, Sloan led a group of investors that put up $30 million to recapitalize Lionsgate. He served as chairman of Lionsgate from 2003 to mid-2004, when he resigned to join the MGM board, and later became chairman and chief executive of the company.

At that time, Sloan also sold SBS, which he founded in 1990 with a $5-million investment, to private equity firms Permira and Kohlberg Kravis Roberts & Co. for about $2.6 billion.

When Sloan became head of MGM, he invested some of his own cash in the company, and was expected to invest more in the future.

Thanks to `` for the alert.

Discuss this news here...