MGM pays ex-CEO a lot of money to go away

Gary Barber, former MGM chief, has reason to smile.

Metro-Goldwyn-Mayer has bought shares and options from former CEO Gary Barber essentially to make him go away, Deadline: Hollywood reported.

Barber received $260 million for 274,392 shares the former chief owned plus options for almost another 3.9 million shares, according to the entertainment news website.

That was on top of about $15 million in severance compensation that Barber received after being fired in March.

Deadline said in return Barber agreed “not to engage” with MGM for three years. Reuters reported last month that Barber was looking into making a bid for MGM. This new deal would preclude that.

What does this mean for Bond 25? Not much. The main effect is Barber goes away, albeit with a lot more money in his bank account.

Had Barber actually mounted a takeover bid, it had the potential to be a sideshow as MGM and Eon Productions are in the midst of getting Bond 25 off the ground. Sideshow averted.

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MGM’s credit rating downgraded by Moody’s

Metro-Goldwyn-Mayer’s credit rating was downgraded, in part because of increased film and TV spending, including Bond 25.

“We believe that the front-end spending on the company’s film (including the next Bond film) and television slate are strategically beneficial,” Moody’s Investors Service said in a statement. At the same time, the New York-based ratings company said “financing the build up with all debt adds financial risk to business risks that are higher than average.”

MGM debt already was below investment grade, known popularly as “junk bonds.” Moody’s lowered its rating on MGM to Ba3 from Ba2. The minimum investment rating at Moody’s is Baa3. MGM, which exited bankruptcy in 2010, now is three levels into junk at Moody’s. The company said it doesn’t expect MGM’s rating to improve through 2019.

Essentially, Moody’s is saying MGM’s increased debt has increased the company’s risk.

MGM has been increasing its debt as it seeks to upgrade its Epix cable channel. Moody’s said the studio’s increased debt ” is a departure from the company’s very conservative financial policies espoused by its departing CEO Gary Barber.”

Barber led MGM out of bankruptcy in 2010. He was ousted earlier this year. A successor has yet to be named.

MGM is home studio to the 007 film franchise, which it controls with Danjaq, parent company of Eon Productions.

Fired MGM CEO explores making a bid for the studio

Gary Barber, former MGM chief

Gary Barber, ousted earlier this year as CEO of Metro-Goldwyn-Mayer, is looking into a bid to acquire MGM, Reuters reported, citing five people “familiar with the matter.”

Here’s a key excerpt from the Reuters story:

MGM could be worth more than $5 billion including debt, and it is far from certain that Barber can raise the funds for a bid, the sources said. His potential bid, however, is aimed at convincing the hedge funds that own and control MGM to explore a sale, the sources added.

Barber owns about 9 percent of MGM through stock options after serving as its CEO between 2010 and 2018, according to the sources. He was let go abruptly in March from MGM after signing a five-year extension to his contract, according to the sources. MGM at the time did not give a reason for his departure.

Why 007 fans should care: MGM is the home studio of 007 films and it controls the franchise along with Eon Productions and its parent company, Danjaq.

In 2016, MGM explored a possible sale to Chinese buyers, The Wall Street Journal reported in February 2017. More recently, The Hollywood Reporter said in April that MGM was again looking into a sale, with its 007 rights a major selling point.

Potential Bond 25 impact: A change in MGM ownership may well affect the announced November 2019 release date for Bond 25. There is no announced distributor for the project.

Background: Barber became co-CEO of MGM in 2010 as it exited from bankruptcy. He eventually was the sole CEO.

MGM exited bankruptcy without a distribution operation. As a result it negotiated distribution deals with other studios. Sony Pictures distributed the last four 007 films (a relationship that began before the MGM bankruptcy).

MGM last year, while Barber was CEO, announced a joint venture with Annapurna Pictures that would release each other’s movies in the United States. But Bond 25 was not part of the deal.

What does this mean? Bond 25 remains a pawn of a chessboard controlled by various business interests.

Amusing trivia: Ian Fleming worked for Reuters in the 1930s.

MGM paid ex-CEO $15 million in severance

Gary Barber, former MGM chief

Metro-Goldwyn-Mayer, in reporting first-quarter financial results on May 16, disclosed it paid former CEO Gary Barber about $15 million in severance.

The home studio of the James Bond film series referenced the payment in a table labeled Adjusted EBITDA (EBITDA stands for earnings before interest, tax, depreciation and amortization).

The table listed $15.362 million as “non-recurring costs and expenses.” A footnote explained: “Non-recurring costs and expenses primarily consist of severance expenses related to the exit of our former CEO.”

MGM gave Barber the heave-ho in March, despite last year extending his contract to run through 2022. In December, in a Hollywood Reporter podcast, Eon Productions boss Barbara Broccoli said Barber was taking the lead on finding a distributor for Bond 25.

MGM also conducted an investor call about the first-quarter results. There was no mention about Bond 25. The only question during the call concerned how MGM is operating with a committee of executives.

The next 007 film adventure has claimed a November 2019 release date in the Unites States. However, there’s no announced distributor. Sony Pictures has released the past four Bond films.

 

Bond 25 questions: MGM edition

Metro-Goldwyn-Mayer had a little, but not much, to say about Bond 25 after releasing fourth-quarter financial results. Naturally, that leaves the blog with more questions.

Was there anything significant in what MGM had to say about Bond 25? In a backhanded way, the studio reaffirmed that November 2019 release date.

Two different executives referenced “the return of James Bond in 2019” in their prepared remarks.

Why is that significant? MGM is the studio that fired its chief executive (Gary Barber) just last week only months after it extended his contract. Whatever the effects of Barber’s firing, MGM said indirectly in won’t affect its plans for Bond 25.

Anything else? Yeah. this is the same production that spent the better part of a year developing a script by 007 scribes Neal Purvis and Robert Wade. Except it apparently put that story aside to see what John Hodge, writing up a new script based on an idea he had and director Danny Boyle had, can come up with.

So, whatever is going on behind the scenes, it would seem Bond 25 won’t get pushed back, at least if the studio can help it.

How stable is MGM? The post-Gary Barber management went out of its way to say things are great, just great.

We’ll see. However, during a call with investors, Barber’s name was only mentioned once and only to say executives wouldn’t answer questions about his abrupt departure.

Why Bond fans should care: MGM controls half of the 007 film franchise.

Why has no distribution deal been announced? Nobody outside of MGM knows for sure, but here’s a guess.

In April 2017, The New York Times reported five studios were seeking the Bond 25 distribution deal.

One of them, Annapurna Pictures, formed a joint venture with MGM. The joint venture will release each other’s movies in the U.S. market.

Now, Bond 25 was not part of the deal. However, on Thursday’s investors call, MGM executives talked up the joint venture as being great, just great for MGM in the long run. It will have more control over its movies and it will make more money in the long run.

Now, if it’s that good a deal, it makes no sense for Bond 25 not to be part of it. And Deadline: Hollywood reported last year, the joint venture was extremely close to distributing Bond 25 in the U.S. But a formal announcement never came.

Even if MGM-Annapurna has the U.S. deal, that still leaves international distribution. For whatever reason, that’s been a long slog with no conclusion yet.

Any other thoughts? Just one. To quote a line from a previous post, “Agent 007 is tethered to a studio where nothing seems to stay stable for long.”

MGM says little about Bond 25 or CEO’s departure

MGM logo

Metro-Goldwyn-Mayer didn’t a lot to say today about either Bond 25 or the abrupt departure of CEO Gary Barber.

MGM has a strong film slate in 2018 and will have “the return of James Bond in 2019,” Chief Operating Officer Christopher Brearton said in introductory remarks during an investor call Wednesday. The company earlier reported fourth-quarter and year-end 2017 earnings.

Chief Financial Officer Kenneth Kay said almost the the same thing as Brearton. He said MGM films in 2019 would be “headlined by the return of James Bond. We are working with out partners at Eon Productions on what we believe will be another highly successful installment of this evergreen franchise.”

Later, during a brief question and answer session, executives were asked about the progress of negotiations for a Bond 25 distributor.

“We don’t have any formal update on this right now,” Brearton said. “We will be updating you when we have further progress in that regard.”

For now, Bond 25 doesn’t have announced distributors. MGM last year formed a joint venture with Annapurna Pictures to distribute each other’s movies in the U.S. market. But Bond 25 wasn’t part of that deal. And even if the joint venture handles Bond 25 U.S. distribution, there’s the question of who will distribute the film in international markets.

MGM had even less to say about Barber’s exit. “We will not be addressing questions about Gary’s departure,” Brearton said.

With Barber gone, MGM is being supervised by an “office of the CEO” that reports to the board of directors. Brearton talked up how remaining executives “are all energized and focused.”

Brearton, an entertainment lawyer, joined MGM last month. Barber became the top MGM executive in 2010 and led the company out of bankruptcy. MGM in October extended his contract through 2022. The extension occurred just months before Barber was fired.

THR says Broccoli & Wilson had rift with deposed MGM chief

Barbara Broccoli

The Hollywood Reporter, as part of a followup story about the firing of Metro-Goldwyn-Mayer chief Gary Barber, said Barbara Broccoli and Michael G. Wilson of Eon Productions also had major differences with Barber.

“(I)nsiders say a rift had also developed between (Barber) and 007 producers Barbara Broccoli and Michael Wilson,” according to the story by THR’s Paul Bond. ‘“There was a revolt,’ says an insider who claims the Broccoli camp ultimately refused to work with Barber.”

The THR story  was posted this morning. Variety and Deadline: Hollywood had new or updated stories Tuesday night. All three outlets described how Barber and board chairman Kevin Ulrich disagreed over strategy. Ulrich, according to the accounts, wants MGM to get bigger amid changes in media.

Variety said MGM’s board “had doubts about whether Barber had the right strategic vision and willingness to take big risks.”

Deadline said: “Ulrich saw an opportunity for MGM to remake itself into a digital powerhouse by renaming Epix with the MGM brand and making it a subscription streaming service that could line up favorably along the likes of Netflix, Amazon, Disney’s new service, Hulu and others that come along. The idea would be to include the upcoming James Bond film’s pay window as part of this.”

The upcoming film, of course, is Bond 25, which has an official U.S. release date of November 2019. Ulrich heads a New York investment company, Anchorage Capital Group, a major shareholder in MGM.

UPDATE (2:35 p.m.): The Wall Street Journal weighed in with an MGM story I can’t access because it’s behind a paywall. However, one of the reporters, Ben Fritz, sent out this tweet quoting from a Broccoli-Wilson statement that’s not referenced in the story.