Interested buyers line up for MGM, no production schedule for Bond 23

News Corp., Time Warner Inc., and Qualia Capital LLC are interested in buying the Metro-Goldwyn- Mayer Inc. film studio, owner of the “James Bond” franchise, according to people with knowledge of the situation - reports Bloomberg

The companies haven’t examined the studio’s finances and their level of interest will depend on price, said the people, who declined to be identified because the talks are private.

Burdened by about $4 billion in debt, Los Angeles-based MGM said last week it is weighing options, including a possible sale of the company. Creditors are hoping to get at least $2 billion, from a single buyer or by selling the assets separately, the people said. Matthew Harrigan, an analyst at Wunderlich Securities, says MGM is worth $1.6 billion to $1.7 billion.

“It’s hard to see it pushing to $2 billion,” Harrigan said in an interview.

Sony Corp. may also be interested in all or part of the studio, people familiar with the situation said. Lions Gate Entertainment Corp. expressed interest in purchasing MGM at a Nov. 12 conference in New York, and Liberty Media Corp. Chairman John Malone said his company would take a look.

“It’s highly unlikely that we’ll make an offer to buy the company,” Malone said in an interview. “We may take a position in the debt.” Liberty Media is based in Englewood, Colorado.

Teri Everett, a spokeswoman for New York-based News Corp., declined to comment, as did MGM’s Susie Arons and Jim Kennedy, a spokesman for Culver City, California-based Sony Pictures Entertainment. Also declining to comment were Ed Adler of New York-based Time Warner, and Melissa Zukerman, a spokeswoman for Qualia, a closely held media and entertainment investment company with offices in New York and Santa Monica, California.

Closely held MGM is controlled by Providence Equity Partners Inc. and TPG. Comcast Corp. and Sony each own 20 percent, while DLJ Merchant Partners holds 7 percent and Quadrangle Group holds 3 percent. Led by Providence, the group bought MGM for $5 billion in 2005. Sony and Comcast have written off their investments.

Created in 1924, MGM holds a controlling interest in the Bond franchise, has a co-production deal in the upcoming film “The Hobbit” and owns a 4,100-title library, including franchise films such as “Rocky” and “The Pink Panther.” The studio’s television library includes the science-fiction TV series “Stargate.”

Lenders have allowed the studio to delay making interest payments on its debt until Jan. 31, MGM said last week. MGM’s $3.7 billion term loan is trading at 65 cents on the dollar, according to people with knowledge of the situation.

MGM may be broken up if a single buyer isn’t found, said Dan Murphy, of Chicago-based Pentwater Capital Management LP, one of MGM’s creditors.

“I think it’s going to be people interested in the individual parts,” Murphy said in a telephone interview.

The library generated about $500 million in cash flow in the fiscal year ended March 31, down about 5 percent, a person familiar said earlier this year.

MGM’s only new release this year, a remake of the 1980 film “Fame,” generated $41.7 million in worldwide ticket sales, according to Box Office Mojo, a researcher based in Sherman Oaks, California.

A new James Bond film is in development and slated for release in 2011. According to Michael Wilson, the producer of the Bond films, there is currently no production scheduled for the film.

“MGM has done such a poor job of refreshing the library. It’s a wasting asset apart from the Bond franchise,” said Harrigan.

Major Hollywood studios are logical buyers of film libraries, Imran Khan, a New York-based analyst with JPMorgan Chase & Co., wrote in a Nov. 12 research note.

“However, the purchase price has to be based on realistic revenue forecast,” Khan wrote.

U.S. traded shares of Sony fell 18 cents to $26.80 at 4 p.m. in New York Stock Exchange composite trading. News Corp. Class A fell slid 46 cents to $11.98 on the Nasdaq Stock Market. Liberty Media -- Capital, a tracking stock tied to the company’s investments, declined 37 cents to $23.11.

Time Warner lost 66 cents to $31.64, while Lions Gate, based in Vancouver and run from Santa Monica, retreated 6 cents to $5.07.

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