MGM has tapped two investment banks and started a formal sale process, looking to generate heat from Hollywood studios, international conglomerates, private equity firms and the growing multitude of SPACS, according to a Wall Street Journal report citing people familiar with the matter.
Here’s what Deadline hears. The private company has mulled a sale for several years but couldn’t seem to find a fit on price. The board is certainly talking; MGM doesn’t have the scale to compete against the biggest studios, but could be a valuable piece for a bigger player. But right now, it’s only talk and we’d be surprised if they engaged bankers to hang a for sale sign anytime soon. It might be like the last report about a possible MGM-related transaction, which came when they tested the waters on possibly not waiting out the pandemic on the 007 film No Time to Die, and parking it with a streamer. There, MGM floated the possibility of granting a one-year license for $600 million, but it was believed that rights holders at Eon decided it would be worth waiting for a possible billion dollar theatrical grosser and not risk denting the viability of the franchise in the future. Also, the ask was outsized and more than streamers wanted to pay for a license on a single picture. It was a headline, for a day, on a deal that was already dead when the story was published. The prospect of an imminent MGM sale might fall in the same category. Many believe that the studio will be sold at some point, but that has been the belief for a long time. To do it now would not be doing it from a position of strength. The 007 movie was pulled out of 2020 and slotted for an April 2 release, one that will likely move again because people are just not going to the movies, a fact reinforced by the subpar international opening of Wonder Woman 1984. Sources suggest it is most likely that talking won’t get serious until the James Bond film plays itself out.
There is every reason to believe that MGM’s film slate will start taking hold and might create some much needed momentum. Michael De Luca was brought in to spearhead that charge, and under his leadership, MGM has been just about the busiest theatrical release-minded studio in the auctions for the biggest movie packages in 2020. A lot of those went to higher bids from streamers, but the studio did acquire the Ridley Scott-directed Gucci movie that has Lady Gaga playing convicted murderer Patrizia Reggiano, in a film that also has Adam Driver, Jared Leto, Al Pacino, Jack Huston and Reeve Carney. MGM has the Paul Thomas Anderson-directed next film, as well as the Ron Howard-directed Thai Cave rescue pic Thirteen Lives, and just optioned the Ta-Nehisi Coates novel The Water Dancer with Oprah Winfrey and is working on a Pink Panther reboot and another Creed sequel. The studio also revived the shingles AIP and Orion. In all, MGM was a bright spot in a year when many studios pulled back as the pandemic brought movie going to a screeching halt.
MGM declined to comment on the prospect of a sale.
SPACS, special purpose acquisition vehicles, are empty shells put together by bankers and industry experts that raise cash, go public and then merge with private companies — which then become public without having to go through a traditional IPO process. A few SPACS recently have said they are targeting media and entertainment for acquisitions.
The WSJ said the studio has hired Morgan Stanley and LionTree to explore a sale, and that it has a market value of around $5.5 billion, based on privately traded shares and including debt. It has about $2.3 billion in long-term debt.
MGM several years ago held exploratory talks with Apple, about a range of scenarios, from a streaming output deal to a full acquisition. More recently, it talked with the tech giant and other streamers about a one-year license to the latest Bond film, No Time to Die.
MGM’s biggest shareholder is hedge fund Anchorage Capital, whose founder, Kevin Ulrich, is chairman and has been under pressure as other financial investors in the studio might be looking to cash out. It was Ulrich who convinced them to stay the course back when Gary Barber exited as studio chief as he implored the board to make a deal back then.