MGM`s United Artists studio in jeopardy
18-Sep-2008 • Bond News
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The contract with United Artists, which has one film in production -- Tom Cruise's Valkyrie -- is expected to be scrutinised by Merrill Lynch's new owners. The deal could be revised or even pulled.
United Artists last year secured $US500 million through Merrill Lynch to fund up to 18 films. However, Lions for Lambs, the first film from the United Artists subsidiary that is run by Cruise and his production partner Paula Wagner, the outgoing chief executive, was a box-office flop.
The role of MGM as a producer has lessened in recent years as the group has focused more on distribution. In the past year, it has moved to expand its production unit.
Last year, the studio made $US558 million from its 4000-title film library but, apart from Casino Royale, the most recent James Bond film, it has not had a big hit.
However, MGM does have several big production projects in the pipeline. These include a collaboration with New Line Cinema on The Hobbit -- a Lord of the Rings prequel -- and a remake of Robocop.
MGM has also enlisted the help of Mary Parent, a former executive with Universal Pictures, to run MGM's global film business, bolstering plans to produce more films.
Speculation about the possible sale of MGM has intensified in recent months as the group announced the departure of Ms Wagner from the chief executive role at United Artists in August.
The group has denied plans for a sale, despite hiring Goldman Sachs to carry out a review after concern about its $US3.7 billion debts. The studio said last month it was not for sale but was exploring "enhancements" to its long-term capital structure.
This could include an initial public offering, a debt refinancing or a foray into the bond market.
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