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Netflix meet with MGM to explore take-over

29-Jan-2020 • Bond News

It was previously reported that Apple had met with MGM in exploratory talks. Apple recently launched their TV+ service and are in desperate need of a content catalog. MGM has 5,200 films under their control and is one of the smaller studios left, making it a cost-effective transaction for the tech giant.

CNBC reports this week that Apple has been joined by Netflix in the list of suitors eyeing an MGM take-over.

What has not been reported is whether MGM is taking meetings with any potential buyer who asks, or if MGM (or any of their major stakeholders) are actively pursuing a buyer. Given the density of the reports and the high-profile names being leaked, it could well be the latter.

As well as a huge back-catalog of films, TV series and intellectual property, a purchase of MGM also grants the buyer 50% of the rights to the James Bond film franchise. The other half is controlled by Danjaq (Barbara Broccoli and Michael G. Wilson), who in turn own EON Productions who make the films.

CNBC summarized the situation: "MGM, in particular, seems like a logical candidate to sell this year. Its owners include Anchorage Capital, Highland Capital and Solus Alternative Asset Management, hedge funds that acquired the company out of bankruptcy in 2010. The funds have made a brilliant decision to sit on their asset for nearly a decade, turning a bankrupt content library into an asset likely worth more than $10 billion, according to people familiar with the matter. And unlike family-owned media companies like AMC (the Dolan family) or ViacomCBS (the Redstone family), the company’s owners are probably less likely to be deterred from selling."

"MGM has held preliminary talks with a number of companies, including Apple and Netflix, to gauge their interest in an acquisition, two of the people said. MGM had revenue of more than $1 billion for the first nine months of the year consisting primarily of about $600 million in TV and film licensing revenue and $300 million from Epix subscriptions. For the nine months ended September 30, 2019, MGM reported adjusted earnings before interest, taxes, depreciation and amortization of $123 million."


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