Bond 25 questions: MGM sale (?) edition

No Time to Die logo

Metro Goldwyn Mayer, home studio of James Bond, may be up for sale. This comes as No Time to Die, the 25th James Bond film, still (figuratively) sits on the shelf, unwatched.

Naturally, the blog has questions.

How solid is this news?

It originated with The Wall Street Journal, which cited people familiar with the situation it didn’t identify. The business newspaper initially published a relatively short story early the evening of Dec. 21. Within a couple of hours, the Journal expanded the article. The audio version of the story went from 2 minutes to 6 minutes.

The Journal has published a number of MGM-related stories in recent years, including how MGM spent much of 2016 unsuccessfully negotiating a sale to Chinese investors and an October article about how MGM was under increasing pressure by investors to sell.

How far along are things? If a sale happens, how long will it take?

The Journal reported MGM has retained investment banks Morgan Stanley and LionTree LLC and that a sales process is underway. That suggests things are at an early stage but there’s no way to know for sure. Meanwhile, the sale of an entire company or substantial subsidiary can easily take months.

Why would MGM want to sell?

The studio is owned by hedge funds, led by Anchorage Capital Group. Hedge funds typically own an asset for a few years and then sell at a profit. The hedge fund owners of MGM have held on to the studio for a decade, longer than the norm.

Then, there’s the No Time to Die money pit.

Money pit?

The cost of the 25th James Bond film was approaching $300 million as of June 30, according to a U.K. regulatory filing. Meanwhile the COVID-19 pandemic has delayed No Time to Die’s release twice (April 2020 to November 2020 to April 2021). MGM’s interest costs on its investment are running at a reported $1 million a month.

MGM normally would start to get its money back when the movie went into release. But, besides the delays, theater attendance is way down because of the pandemic.

Who are possible buyers?

The Journal said the studio is looking to non-traditional buyers. Certainly some familiar Hollywood names have their hands tied.

Walt Disney Co. still is digesting its acquisition of 20th Century Fox. The company’s theme park business also was hurt by the pandemic. Warner Bros. is part of AT&T, which is revamping its entertainment assets to build up its new HBO Max streaming service.

Tech company Apple Inc. is a possibility and it needs programming for its own streaming service. But Apple has lots of other ambitions, including getting into car production by 2024, according to Reuters. A deal with Apple isn’t a sure thing.

What does all this mean for the Bond franchise?

MGM and Danjaq LLC control the franchise. An MGM sales means, at the very least, that Danjaq will have to deal with yet another executive regime. Danjaq has had plenty of practice at that since 1981, when United Artists was bought by MGM.

There could be a bigger effect if an MGM buyer had a streaming operation, the way Apple does. Danjaq and its Eon Productions like to make a big movie every so often. Would Danjaq/Eon even be interested in doing streaming series, the way Disney Plus is doing with Marvel and Star Wars?

Hard to say. Barbara Broccoli of Danjaq/Eon said last year she was resisting the idea of spinoffs. Then again, things can change. We might get The Adventures of Bill Tanner or Loelia! as streaming shows.

MGM explores a sale, WSJ reports

MGM’s Leo the Lion logo

Metro Goldwyn Mayer, James Bond’s home studio, is looking into selling itself, The Wall Street Journal reported, citing people familiar with the matter the paper didn’t identify.

MGM has retained investment banks Morgan Stanley and Lion Tree LLC to assist with a sale, according to the financial newspaper.

The studio is looking to its film library, which includes the Bond movies, Rocky films and Pink Panther productions, to generate interest. MGM also has television shows such as Fargo and The Handmaid’s Tale.

MGM and Danjaq LLC, parent firm of Eon Productions, control the Bond franchise.

The studio reportedly spent much of 2016 exploring a sale to Chinese investors before talks broke off late that year. In recent years, MGM has described itself as the leading independent studio in Hollywood.

MGM is owned by hedge funds, led by Anchorage Capital Group. The hedge funds took control after MGM exited from bankruptcy in 2010.

The studio explored selling a one-year lease on No Time to Die, the 25th James Bond film, to streaming service Apple Plus, according to multiple news accounts this fall. The Hollywood Reporter said in October that MGM didn’t consult with Danjaq/Eon, which generated displeasure from boss Barbara Broccoli.

Release of No Time to Die has been held up by the COVID-19 pandemic and the movie currently has an April 2021 release date. The film cost almost $288 million to make as of June 30, according to a U.K. regulatory filing.

Assuming the Journal report is accurate, a new chapter in the troubled MGM-Danjaq relationship may be about to unfold. MGM would provide a lot of programming for streaming services.

Bond 25 questions: The future of MGM edition

No Time to Die poster from spring 2020

It turns out No Time to Die is not just a James Bond movie. It’s also a bargaining chip concerning the future of Metro-Goldwyn-Mayer, Bond’s home studio.

Naturally, the blog has questions.

What’s going on?

MGM is owned by hedge funds. They acquired the studio when it was in bankruptcy in 2010. Hedge funds typically acquire assets and sell (or “flip”) them a few years later at a profit.

MGM’s hedge fund owners have held onto to the studio for a full decade. That’s longer than is typical of hedge funds.

There have been attempts at selling the studio. MGM spent part of 2016 trying to sell itself to a Chinese buyer, according to news reports in early 2017. CEO Gary Barber was in early “unsanctioned” talks to sell MGM to Apple in 2018. That spurred MGM’s board to fire him, The Wall Street Journal said in part of a story about MGM on Oct. 11.

No Time to Die, a $250 million production, was supposed to generate $1 billion in global box office pre COVID-19. That could boost an MGM sales price. But various delays, including two COVID-related ones, have complicated that rosy scenario.

Why should Bond fans care?

The Bond franchise has felt the impact of shaky MGM ownership ever since MGM acquired United Artists in 1981. At times, Eon Production was under the gun to get movies out fast or hold costs down. The whole 1989-1995 hiatus was the direct result of a financial mess at MGM.

Any push by MGM to sell now would be amid the growth in streaming services. Possible buyers may include Apple and Amazon.com, two tech companies active in streaming.

What happens now?

As once said in Diamonds Are Forever, people are playing Monopoly with real buildings, or at least movie and TV studios.

This week’s Wall Street Journal story depicts Anchorage Capital Group, the largest single MGM hedge fund owner, as under pressure to do a deal.

In one passage, the story indicates that Anchorage views the still-unreleased No Time to Die as something that could boost a sales price. A buyer could assume control of No Time to Die’s distribution.

There is a complication, according to the Journal. Comcast Corp.’s Universal is set to distribute No Time to Die internationally. If someone other than Comcast buys MGM, Comcast may need to be compensation.

But I just want my Bond movie! Why do I to follow this other stuff?

Life is complicated sometimes.

MGM’s lead owner under pressure to do deal: WSJ

MGM’s Leo the Lion logo

Metro-Goldwyn-Mayer’s lead owner, hedge fund Anchorage Capital Group, to do a deal involving James Bond’s home studio, The Wall Street Journal reported.

The person in the center of all this is Kevin Ulrich, head of Anchorage and chairman of MGM.

Anchorage is MGM’s largest owner. Anchorage had hoped that the release of No Time to Die would boost MGM’s value for a deal, the Journal said. But the newest delay in the 25th James Bond film has complicated the situation. Here’s an excerpt:

Some Anchorage clients have asked the hedge fund whether the perks and privileges that come with being a Hollywood chieftain have influenced Mr. Ulrich’s call to stay with MGM, the lengthiest and largest investment in Anchorage’s history. Other MGM investors have asked the same.

Ulrich declined to be interviewed by the Journal.

The Journal also said Ulrich has indicated he is working toward a deal and referenced Amazon.com, Apple Inc., Comcast Corp. (parent company of Universal, which is releasing No Time to Die internationally), and Facebook Inc. as possible buyers.

The financial news outlet also said CEO Gary Barber was fired in 2018 for holding “unsanctioned” talks with Apple. Barber was never replaced and MGM is governed by an “office of the chief executive.”

If the Journal’s reporting is accurate, No Time to Die is one of the main bargaining chips concerning MGM’s future. Another excerpt:

A person close to Anchorage said Mr. Ulrich believes MGM is a more-attractive asset because it hasn’t released “No Time to Die,” giving a buyer control over its launch and distribution.

If MGM were sold, Universal would need to be compensated, the Journal said. Presumably, that wouldn’t apply if Comcast were the buyer.