Life is Good for MGM

[VSS]

Today in a remarkably disjointed article in LA Weekly, I found this:

Meanwhile, there’s more good news for the struggling studio. (Edit: They don't say what the first set of good news is...) I’m told that the Bank of Montreal has come back with a valuation of MGM’s 4,000-plus title library that exceeds the $5.5 billion required under MGM’s term loan. So that library valuation and this audit’s “going concern” opinion will mean no default issues in the near term for the company. But the studio is by no means out of the woods in the long term.

I first reported about the audit of MGM’s activities, especially its TV and movie-production slate, back on May 14 when the studio announced it was taking steps to restructure in the face of a total $3.7 billion in debt due in July 2012. Had the audit gone the other way, then a thumbs-down could have triggered covenants forcing MGM to declare itself insolvent and/or repay its massive debt. In short, all hell could have broken loose.

Link: Life is Good for Seacrest, MGM....

(It's been moved- see my next post below).

[Skylore]

Thanks for the update. Good to know MGM is still afloat. Hopefully that will lead to some official good news for the SG-1 and SGA movies.

(hope the article gets reposted!!)

[VSS]

Thanks for the update. Good to know MGM is still afloat. Hopefully that will lead to some official good news for the SG-1 and SGA movies.

(hope the article gets reposted!!)

Yes, here's the real thing- I think it was accidentally posted on her old website for a few minutes:

Studio Library Valued at 5.5 BN

That's a couple billion more than they thought it might be worth, I think. Very good news.

[Phenom]

No biggie really. If MGM went belly up someone else would just buy their library and rights etc. The world would keep spinning and some other company would make money out of Stargate via movies/series in the future.

[amconway]

No biggie really. If MGM went belly up someone else would just buy their library and rights etc. The world would keep spinning and some other company would make money out of Stargate via movies/series in the future.

I have to disagree. I think it's a huge biggie. Someone else (probably several someone elses) would buy it all up, but there's nothing to say that the new owners would value the stargate franchise as MGM has, or would even honor previously made commitments. On a purely legal basis, the movies would have been in limbo until well after any sale, and may never have happened at all. This is a much, much better situation.

Thanks for posting, VSS. That's good news.

[Devlin Kyle SG-9]

Could these financial problems explain why MGM pulled way back on it's plans for DTDVD movies and the Blu Ray releases?

[Morrolan]

I don't see it as good news. Maybe better news. The company still has massive debt and is in serious trouble. If the library is valued at $5.5 billion, it's worth much less in the real world. MGM needs to make movies that make money between now and 2012. Stargate DVD's just aren't going to cut it. Are there real valuation numbers on the Stargate franchise? I would think it would be cheap enough for a private group to keep it going.

[amconway]

Could these financial problems explain why MGM pulled way back on it's plans for DTDVD movies and the Blu Ray releases?

It's almost certain to be a factor.

[EdenSG]

I have to agree with those that don’t see this as entirely good news.

MGM is still in big financial trouble. In an article from Variety (7/15/2009) it discusses how MGM just passed their big audit:

But that doesn't mean that it'll be smooth sailing ahead for the studio.
MGM's statement contained no mention of plans to move ahead with its more recognizable properties -- the two "Hobbit" movies it's due to co-finance with Warner Bros. and the 23rd installment in the James Bond franchise. Many in Hollywood are skeptical that the Lion can find the coin to do so, as it's widely believed that the tight credit markets have hampered MGM's ability to raise additional production funds this year.

http://www.variety.com/article/VR111...query=MGM+Debt




Also this article talks about how and why many of the studios were at ComicCon promoting DVD’s.

The goal was to generate pre-release buzz and awareness around the titles, through panel discussions, photo ops, autograph signings with celebs, sweepstakes, screenings and giveaways.
The recession has forced studios to scale back some of those events, which in the past included MGM Home Entertainment's premiere of "Stargate: Continuum" on an aircraft carrier and Warner Bros.' screening of "300" at Petco Park stadium.
But the increased presence by studio homevid arms at Comic-Con is an effort to slow down a 13.5% slump in DVD sales during the first six months of the year, and a 9% overall drop last year.

http://www.variety.com/article/VR111...M+film+library


From everything I have read, the financial problems at MGM, a lack of money for new productions and the plummeting DVD sales really tell the story as to why there has been forward movement on the SG-1 and SGA movies and the pull back on the Blu-ray discs.

[amconway]

Perhaps 'good news' isn't the phrase I was looking for. 'Better news than the alternative and potentially good news if other events occur' is probably more accurate, but it's a bit wordy.

[majorsal]

From everything I have read, the financial problems at MGM, a lack of money for new productions and the plummeting DVD sales really tell the story as to why there has been forward movement on the SG-1 and SGA movies and the pull back on the Blu-ray discs.

but they found the money to remix an old ep (children of the gods) and put it onto dvd, and make an entire new stargate series, which can't be cheap.

[VSS]

Perhaps 'good news' isn't the phrase I was looking for. 'Better news than the alternative and potentially good news if other events occur' is probably more accurate, but it's a bit wordy.

Right. MGM could have just as easily gone down in flames over the audit and valuation. On the other hand, that might have been the best thing if they can't even come up with enough cash to produce a couple of TV movies they know will make money for them-even if DVD sales are down. I'm almost in favor of letting someone with some capital have a crack at buying the Stargate franchise in a fire sale at this point given all the foot-dragging that's going on.

[EdenSG]

Perhaps 'good news' isn't the phrase I was looking for. 'Better news than the alternative and potentially good news if other events occur' is probably more accurate, but it's a bit wordy.

I don't think that was too wordy at all - I think you said it well.

You are right, it is better than the alternative. The good news is they passed their audit and remain solvent, but the bad news is they are still have big financial problems.

[EdenSG]

Right. MGM could have just as easily gone down in flames over the audit and valuation. On the other hand, that might have been the best thing if they can't even come up with enough cash to produce a couple of TV movies they know will make money for them-even if DVD sales are down. I'm almost in favor of letting someone with some capital have a crack at buying the Stargate franchise in a fire sale at this point given all the foot-dragging that's going on.

That is an interesting thought. Would MGM sell off some of their assests such as the SG franchise to raise cash?

While selling the SG franchise might be a good thing it could also turn out to be a disaster. You could have someone buy the franchise but then change or reivent it. Often when a producation company buys a property they like to bring in their "own" people and tinker with it a bit to put their "stamp" on it. Their is no quarantee a new company would continue the franchise as is or do something totally different with it.

[VSS]

That is an interesting thought. Would MGM sell off some of their assests such as the SG franchise to raise cash?

While selling the SG franchise might be a good thing it could also turn out to be a disaster. You could have someone buy the franchise but then change or reivent it. Often when a producation company buys a property they like to bring in their "own" people and tinker with it a bit to put their "stamp" on it. Their is no quarantee a new company would continue the franchise as is or do something totally different with it.

I don't think they'd sell off any production units, after all, the reports keep mentioning over and over that they need to be making movies. I was thinking about bankruptcy. It's like AIG- which perhaps should have been carved up and sold while parts of it were still profitable- it's just barely getting by and will probably fold in the end after they've ruined some of their assets.