MGM Home Entertainment splits from Sony, Casino Royale release unaffected
31-May-2006 • Bond News
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MGM, which was purchased by a Sony-led group a year ago, previously split the home-entertainment business between Rupert Murdoch's News Corp. and Tokyo-based Sony. MGM will distribute its own television shows, the Los Angeles-based company said today in a statement.
The moves come three months after MGM Chief Executive Officer Harry Sloan announced the studio will boost its production next year to as many as 22 films compared with 12 this year. MGM is changing its strategy to produce more films rather than relying on the sale of movies in its library of 4,000 films and TV shows. MGM's international theatrical distribution deal with Fox is unaffected.
``It's an admission that Fox can do it better,'' Paul Kagan, chief executive officer of PK Worldmedia Inc., a Carmel, California-based media research company, said of the home-video changes. ``These kind of distribution deals are always done for economics.''
The changes don't affect Sony's distribution of the November release of the James Bond film ``Casino Royale,'' Sony and MGM said in separate statements. MGM and Sony agreed to co-produce and co-distribute the next James Bond film, ``Pink Panther,'' and some others.
Sony Pictures will ``vigorously support our continuing relationship with our partners to preserve and enhance the value of the MGM brand,'' spokesman Jim Kennedy said in a statement.
Fox spokeswoman Teri Everett declined to comment.
The distribution fee from Fox was ``attractive and competitive,'' MGM's Sloan in an interview. He declined to discuss financial terms. ``Our partner continues to be our partner,'' Sloan said of Sony.
Sony Support
The MGM board, which includes Sony Chief Executive Officer Howard Stringer, Sony Corp. of America Chief Financial Officer Robert Wiesenthal and Sony Pictures Chairman Michael Lynton, voted unanimously for the changes, Sloan said.
``I think Sony believed they needed the best financial set- up,'' Sloan said. ``Sony supported this.''
In April 2005, a group led by Sony that included Comcast Corp. and private equity investors Providence Equity Partners, Texas Pacific Group, DLJ Merchant Banking Partners and Quadrangle Group completed the purchase of MGM.
American depositary receipts of Sony, each representing one common share, fell $1.61 to $45.20 in New York Stock Exchange composite trading. Class A shares of New York-based News Corp. fell 13 cents to $18.87.
MGM will continue to distribute its own films in theaters in the U.S. and Canada, Sloan said.
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