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Lion For Sale

21st December 2020

Another twist in the fate of No Time To Die may be yet to come

MI6 logo By MI6 Staff
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UPDATE (21st December 2020)
MGM is officially up for sale as the studio has hired Morgan Stanley and LionTree to serve as advisors in the process. MGM declined to comment to the WSJ, who reported that the current market valuation of the company is said to be "around $5.5 billion, based on privately traded shares and including debt." Industry analysts expect a buyer could be up to twice that amount in a competitive situation.

As MI6 reported back in October, a sale of MGM to new owners could throw the release of 'No Time To Die' into chaos yet again. If the new owner has their own monetized streaming platform, the film could be released online or in tandem with a traditional theatrical release. Danjaq has been insistent that the film is released only in theatres first, but it is hard to imagine the planned April 2021 date being viable, and it is unclear if they can veto a shift in release strategy (filmmakers from Warner Bros were not able to block their entire 2021 slate going to HBO Max).

ORIGINAL STORY (11th October 2020)
MGM has been up for sale, on and off, since the box-office takings for 'SPECTRE' were cashed and spent. In 2016, MGM was close to selling to Chinese investors before the government in Beijing cracked down on foreign investments. That put Bond 25 back an entire year for a budget green light. 

A little over a year later, then CEO Gary Barber was said to be secretly negotiating with Apple for a sale of MGM for $6b without the knowledge of the board. MGM denies to this day that they were in talks, but Barber was fired. Minority shareholders were furious and had wanted a deal.

Since then, MGM has been without a single CEO but instead opts for an 'office of the Chief Executive' with responsibilities split between the board members. The biggest shareowner of MGM, hedge fund company Anchorage Captial, has its manager Kevin Ulrich at the helm. 

As it stands today, MGM owns half the rights to the James Bond film franchise after they took over United Artists, who in turn had purchased them from producer Harry Saltzman who hit financial difficulties in the early 1970s. The other 50% is owned by Danjaq, the parent company to EON Productions - both ran by Barbara Broccoli and Michael G. Wilson who inherited it from Albert R. 'Cubby' Broccoli. MGM and Danjaq's deal is complicated, but in an over-simplified nutshell, MGM front the money and Danjaq/EON make the films (although MGM has veto power over casting). MGM controls the home distribution rights and Danjaq approves merchandise deals. MGM also used to distribute theatrical releases worldwide, but have had to partner for international territories since they lost that wing of their business in the last bankruptcy restructuring.

The plan was to release 'No Time To Die' in 2020 (hence the tone-deaf push for November until they pulled the plug last week), cash in on the box-office and reduce some of MGM's $2.3b debt, and then sell the studio for more than than the $6b that Apple had valued the company at. Industry estimates peg MGM to be worth around $8b or $9b.

With the Bond film now pushed to 2021, the strategy has changed - according to a Wall Street Journal report this weekend- to sell MGM with 'No Time To Die' unreleased and therefore a valuable asset to its new owner.

Conflict is also rife within the ranks of Anchorage Capital, whose MGM stake represents 14% of the total investments. According to the WSJ, several members of the hedge-fund are questioning if Ulrich has the motivation to have a deal closed whist he enjoys the glitz and glamour of being part of the management of a Hollywood studio. Anchorage's investment in MGM is the biggest and longest in the fund's history and should have seen an exit through a take-over deal by now. Anchorage has also seen the value of its assets drop 40% in the last three years. There is pressure to get a deal done and turn around the fortunate of the hedge fund.

Private shares in MGM are currently said to be valued at $75, way down on the $120 valuation they enjoyed when Apple was interested in buying the studio two years ago. Since then, MGM has racked up more debt, seen a drop in revenues from home media, and failed to meet income expectations from Epix.

Ulrich is said to have briefed his hedge fund that deal talks have been made with Comcast (who own Universal), Apple, Amazon, and Facebook. Netflix was not mentioned, however, they were said to have met in January this year. Apple was reported to have MGM on their target list for acquisitions back in September last year and met with MGM in December. These potential buyers were also sniffing around MGM in 2017 before Bond 25 was in pre-production.

One element not covered by the WSJ report was that back in June, MGM deliberately let the deal they had with Fox (now owned by Disney) for home entertainment rights lapse and did not renew with any other distributor. This means that Blu-Ray and DVD rights to the 4,000 title catalog are also up for grabs in the sale.

A new buyer of MGM would have control over the release and distribution of 'No Time To Die'. If that new buyer is not Comcast, then Universal would have to be compensated if they decided to change plans.

How would 'No Time To Die' fair it MGM is bought by one of the interested parties before April 2021?

Comcast: Potentially little change other than the North American distribution would also be handled by Universal. Bond would have a strong studio partner with a focus on theatrical releases and hefty budgets. Universal would have the strongest slate of franchises outside of Disney with 007, Fast & Furious, and Jurrasic World.

Apple: With no film distribution arm, Apple has had to partner with others to release films in cinemas. Apple TV+ has been criticized for its lack of depth and MGM's library of 4,000 titles would give it a much-needed boost. Apple will have had access to the viewing metrics on its recent Bond in 4K launch. All Bond films would likely disappear from rival streaming services.  'No Time To Die' could be released as a PVOD title on Apple's platform.

Amazon: Similar to Apple, except that Prime does not need the MGM library as much as Apple. Amazon does have a fledgling distribution arm and no longer has to rely on partners to release films in cinemas. Amazon Studios had 22 original films scheduled for release in 2020. Purchasing MGM would bolster Amazon's position against Netflix.

Facebook: The curveball of potential buyers. It does not have a content subscription service, no clear path to monetization, no studio infrastructure, and no original content. If Facebook buys MGM, it would be to bootstrap a studio for its own platform and not for the cash 'No Time To Die' would bring.

Anyone who feels confident that 'No Time To Die' will be released in cinemas in April 2021 by MGM and Universal may want to strap in for a potential rollercoaster plot twist over the coming months. 

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