MGM watch: Wall Street Journal previews vote by studio debt holders

The Wall Street Journal has a detailed story on its Web site previewing the Oct. 29 vote by Metro-Goldwyn-Mayer Inc. debt holders that will determine who gets to run MGM: Spyglass Entertainment’s co-founders Gary Barber and Roger Birnbaum, or investor Carl Icahn.

The story (which you can read in its entirety by CLICKING HERE) lays out this scenario if the Spyglass plan gets the nod:

If it wins enough support—odds appear to favor it—MGM will file for a Chapter 11 bankruptcy as soon as Sunday, and the 86-year-old company, the source of more than 200 Academy Awards for classics like “Gone with the Wind,” will pass to distressed-debt investors more accustomed to reworking home-health-care firms and community banks.

They aim to be ruthless about costs. They plan to outsource to another studio the task of distributing films to theaters, then focus on the television business—cutting deals with cable-TV channels, video-on-demand services and online streaming companies, especially abroad….(Barber and Birnbaum) would make just four to six movies a year, most with modest budgets of $50 million or so, though allowing for an occasional big one.

The story, by Mike Spector and Lauren A.E. Schuker, includes details of a March meeting where creditors didn’t support a MGM management plan to raise $1 billion to make 10 “big movies” a year, eventually leading to the Spyglass plan.

MGM’s half stake in the James Bond franchise is only mentioned in passing and there’s no specific information on the stalled Bond 23. Michael G. Wilson and Barbara Broccoli, the half-siblings who run Eon Productions, suspended work on Bond 23 in April because of the MGM financial uncertainty. If the Journal story is accurate, one possibility is that the March meeting described in the Journal story is one reason why. Eon controls the other half of the 007 franchise.

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