Lionsgate expresses an interest in MGM purchase, if the price is right

13-Nov-2009 • Bond News

So, tell us something we don't know. In other words, what media company wouldn't be interested in buying MGM -- whose 4,000-title movie library includes valuable rights to the James Bond franchise and J.R.R. Tolkien's classic "The Hobbit" -- at a bargain-basement discount?

When asked at an investment conference today in New York whether Lions Gate Entertainment would be interested in buying the beleaguered MGM, vice chairman Michael Burns said it would -- but only if the price is right -- reports the LA Times.

"It's all about price," Bloomberg quoted Burns telling investors, adding, "We'll know sooner rather than later" what it's going for. Given MGM's financial straits, Hollywood insiders peg its value at between $2 billion to $2.5 billion, a steep decline from the $5 billion that a group of investors paid for the studio several years ago.

When Company Town followed up and called Burns, he simply said, "Obviously, we'd look at any complimentary asset at the right price where we can leverage our infrastructure."

Lionsgate, the Santa Monica movie and television studio behind the "Saw" and "Tyler Perry" movie series and "Weeds" and "Mad Men" cable shows, has also in the past shown strong interest in buying Summit Entertainment, the studio behind the "Twilight" franchise.

MGM, which for months has been struggling to restructure $3.7 billion in debt, is expected to go on the auction block officially in the near future. But so far, Lionsgate and presumably other potential bidders haven't been shown the numbers.

Many in Hollywood are betting that the winning bidder will be Time Warner, flush with billions in cash after spinning of its cable systems. Before MGM was sold to a consortium of investors, including private equity firms, Sony Corp. and Comcast Corp., Time Warner -- which owns Warner Bros. -- was on track to buy it.

It would also make sense because Warner Bros.' New Line Cinema unit plans to co-produce two "Hobbit" movies with MGM.

News Corp.'s 20th Century Fox, which distributes MGM's movies on DVDs around the world, would also be a logical buyer. News Corp.'s got a lot of cash, too.

Last month, MGM's lenders agreed to let the studio forgo its next three interest payments until Dec. 15.

The clock is ticking.