Sony passed on chance to buy MGM, WSJ says

Sony Pictures at one time passed on a chance to outright buy Metro-Goldwyn-Mayer, the home studio of James Bond, The Wall Street Journal reported.

The Journal doesn’t specify exactly when this occurred. But, based on the story by Ben Fritz, it was before MGM reorganized during a 2010 bankruptcy. Here’s the key excerpt:

Sony Pictures executives discussed buying Metro-Goldwyn-Mayer, whose James Bond movies Sony had distributed for years. Instead MGM reorganized itself into an independent venture. Other potential acquisitions targets for Sony included DreamWorks Animation and pay-cable network Starz, according to employees. Lions Gate Entertainment Corp. ended up buying the network.

“There was a cautious business philosophy where we did not want to take big swings,” said a former Sony Pictures executive.

The story concerns both Sony Pictures and Paramount described as “Hollywood’s two worst-performing movie studios” by the Journal.

Paramount missed its own opportunity. It initially released movies produced by Marvel Studios. But Walt Disney Co. moved in and bought Marvel.

Sony has released the past four James Bond films, starting with 2006’s Casino Royale. Sony’s most recent two-picture 007 distribution deal expired with SPECTRE. Under that contract, Sony co-financed the films but only got 25 percent of the profits.

The Journal recently reported that MGM’s attempts to sell itself to a Chinese buyer fell apart last year.

Regardless, MGM has no distribution agreement for Bond 25. The studio and Danjaq (parent company of Eon Productions) control the Bond franchise.

Bond 25: Why MGM has to get bigger or sell out

Image for the official James Bond feed on Twitter

Image for the official James Bond feed on Twitter

For the James Bond film franchise, Metro-Goldwyn-Mayer is a millstone.

MGM is not big enough to compete with other major studios by itself. Since a 2010 bankruptcy, the home studio of 007 films has needed studio partners to distribute and market Bond movies.

For the past two Bond films, 2012’s Skyfall and 2015’s SPECTRE, MGM negotiated a sweet deal with Sony Pictures. Sony co-financed the movie but only got 25 percent of the profits. Sony ended up in third in line behind MGM and Eon Productions for the 007 spoils.

But good fortune like that only lasts so long.

The Sony deal expired with Skyfall. “There’s no rush,” MGM CEO Gary Barber said of reaching a new Bond distribution deal with Sony or another studio. “We’re evaluating all of our options. We will advise on the deal when we actually make it.”

MGM logo

That was eleven months ago. No hurry, indeed.

In reality, other studios — Sony, Warner Bros. and Paramount among them — have their own issues.

Sony’s parent company wrote down the value of its movie business by almost $1 billion, an indication that things aren’t going well. Warner Bros.’s parent company, Time Warner, is in the midst of an $85 billion acquisition by AT&T. Also, Warner Bros. is struggling with its “extended universe” of movies based on DC Comics characters. Paramount is struggling, period.

Under those circumstances, cutting a deal with MGM to distribute Bond movies might not be the top priority. Even more stable studios, such as 20th Century Fox and Universal, probably want a better deal than Sony got for Skyfall and SPECTRE.

These days, MGM mostly makes television shows while producing a few movies.

Bond, however, remains MGM’s biggest property, going back to when MGM acquired United Artists in 1981. 007, which not that long ago had his first $1 billion box office movie (Skyfall), is a major league property, or at least can be.

For that promise to be fulfilled, however, Bond needs to be at a major league studio.

MGM isn’t that. It hasn’t been for a long time.

To be a big-time studio, MGM needs to be able to release its own movies and be in more control of its destiny.

It’s fine to cut deals with other companies for financing (other studios do). Ultimately, however, Bond’s home studio needs the ability to distribute the movies.

MGM’s Barber wants the company to sell stock to the public in the next three to five years. Maybe it can become big enough to be a real studio again.

But if it can’t, the 007 franchise will suffer. From the selfish standpoint of Bond film fans, a better option might be for MGM to sell to a studio that has big league status.

More turmoil at would-be Bond 25 studio partner Paramount

Paramount logo

Paramount logo

Paramount Pictures, one of the would-be studio partners for Bond 25, may be experiencing some more turmoil.

Bray Grey, the studio chief, is in talks with parent company Viacom about taking a different post at Viacom, the entertainment news website The Wrap reported, citing two people familiar with the situation it didn’t identify. Paramount and Viacom did not comment, The Wrap said.

The Los Angeles Times, which also reported on the talks, said Paramount could announce Grey’s exit as early as next week.

Paramount is among the studios that is supposed to be interested in striking a deal with Metro-Goldwyn-Mayer to release Bond 25. MGM isn’t big enough to release its own films.

Sony Pictures has released the last four 007 films but its most recent two-picture 007 film contract expired with 2015’s SPECTRE. Paramount has done business with MGM, releasing MGM’s 2016 Ben Hur flop.

Paramount has struggled and Viacom was hobbled by a fight where the controlling Redstone family ousted CEO Philippe Dauman last year. The Redstones also control CBS and for a time wanted the companies to consider a merger. Those talks ended in December.

The talks with Grey “come nearly two weeks after” Viacom’s current CEO, Bob Bakish, “made a public mandate for improved financial performance at the studio,” The Wrap said.

Other would-be Bond 25 studio partners also have issues.

Sony Corp., parent company of Sony Pictures, last month wrote down the value of that studio by almost $1 billion. Sony Corp. has said it’s not planning to sell the movie business. Warner Bros.’ parent company, Time Warner, is being acquired by AT&T, but that $85 billion deal is pending regulatory review.

MGM’s possible studio partners for Bond 25 Part III

Image for the official James Bond feed on Twitter

Image for the official James Bond feed on Twitter

It’s a new year but there some leftover business from the old: What studio will end up releasing Bond 25?

The blog has twice (once in April and again in September) analyzed the possibilities. So here’s an updated look.

Sony (the incumbent): Sony Pictures released the last four 007 films but as of now has no new contract with Metro-Goldwyn-Mayer for future Bond movies.

Not a lot new since September. Last year’s Ghostbusters reboot wasn’t a success for Sony and isn’t likely to become a franchise. Sony is teaming up with Marvel Studios to get new Spider-Man movies going.

Sony may be sufficiently desperate to again accept a low-profit distribution deal for Bond 25. Most recently, Sony co-financed Skyfall and SPECTRE but only got 25 percent of the profits. It received less money than MGM and Danjaq, the parent group for Eon Productions.

However, there’s the possibility of a wild card.

The New York Post last month reported that its “Tokyo tipsters claim” that CBS chief Les Moonves was looking to acquire Sony Pictures from its parent company, Sony Corp. The story didn’t offer much in the way of details. Certainly, no actual deal materialized.

Paramount: CBS had been looking to merge with Viacom, parent company of ParamountBut that deal unraveled in December.

CBS and Viacom had once been together but then were split apart. The companies are controlled by the Redstone family. There had been a family soap opera in 2015 and 2016 which led to, among other things, a new leadership team at Paramount.

It remains to be seen how quickly Paramount recovers from all this and whether it’s in the position to make a Bond deal with MGM.

Warner Bros.: AT&T announced in October it agreed to acquire Time Warner, parent company of Warner Bros. The $85 billion deal isn’t forecast to be complete until the second half of this year.

That raises the question whether Warners can do a Bond 25 deal. The studio already is busy trying to establish its “shared universe” of movies based on DC Comics characters. Two big ones, Wonder Woman and Justice League, are coming out this year.

20th Century Fox and Universal: Neither studio has the issues confronting Sony, Paramount or Warner Bros. Either or both could make a play. But the question is whether either would be willing to take the kind of low profits Sony got for Skyfall and SPECTRE.

Walt Disney Co.: This is strictly a guess but Disney doesn’t act like a company interested in doing a limited distribution deal for Bond. Disney likes to get out its checkbook and buy properties whole, such as Marvel and Lucasfilm Ltd. If Disney were interested in 007, it’d be more likely to buy everybody else out.

MGM (?): Sony emerged from bankruptcy in 2010 as a much smaller company without its own movie distribution operation.

MGM has been working toward an initial public offering of stock in a few years. However, if the pending AT&T acquisition causes a new round of media deals, MGM will face a decision.

Is the current strategy adequate? If not, does it get bigger (and re-establish distribution)? Or does it sell out and get acquired by someone else?

Mission: Impossible 6 to be released in July 2018

Tom Cruise

Tom Cruise

Paramount has scheduled Mission: Impossible 6, starring Tom Cruise, for July 2018, Deadline: Hollywood and Variety reported separately.

The specific date is July 27, 2018. The last weekend of the month is becoming a bit of a preferred release date for spy movies.

Cruise’s last M:I film, Mission: Impossible Rogue Nation, debuted on July 31, 2015. Universal had the U.S. launch of Jason Bourne on July 29 this year.

Mission: Impossible Rogue Nation had a U.S. opening weekend of $55.5 million, as part of a total U.S. box office of $195 million and $682.3 million globally.

Deadline noted that Warner Bros./DC Comics has an unspecified movie scheduled for the same date as M:I 6.

The Cruise M:I movies began in 1996. The producer-star will be 56 when the latest installment comes out.

UPDATE: 3 would-be Bond 25 distributors struggle

Image for the official James Bond feed on Twitter

Image for the official James Bond feed on Twitter

Last month, the blog examined how real-life developments could inhibit two studios from seeking a deal to distribute Bond 25 and future 007 films.

At least one other studio may also encounter problems. So this post is part new and part recap.

Sony (the incumbent): Sony Pictures, through its Columbia Pictures brand, has distributed the last four Bond movies. But there was a management change last year, with Amy Pascal (an ally of Barbara Broccoli, co-boss of Eon Productions) departing.

Well, according to Variety’s James Rainey, things haven’t gone well with the new regime. An excerpt:

A series of personnel complaints and threatened defections by senior executives have raised questions about the leadership of Sony Pictures Entertainment movie boss Tom Rothman, several sources said — a difficult challenge for a studio already fighting to gain traction during a rough year at the box office.

(snip)
The unhappy Sony executives report that Rothman has made their lives untenable with his micro-management and obstreperous manner, which they say has also alienated talent agents, producers, directors and actors, many of whom are now loathe to bring their projects to Sony, the sources said.

Sony didn’t make that much money from Skyfall and SPECTRE because it only got a 25 percent split of the profits, earning far less than Metro-Goldwyn-Mayer and Eon.

Presumably, Sony would want a better deal from MGM if one could be secured. The Variety report suggests things remain unstable at Sony, which suffered computer hacks in 2014 that damaged its reputation.

Warner Bros.: The studio’s parent company, Time Warner, agreed last month to be acquired by AT&T Inc. in an $84.5 billion deal.

That transaction likely won’t be final until late 2017. The question becomes whether Warners is in a position to make a Bond 25 deal until the AT&T acquisition becomes final.

Paramount: The studio’s parent company, Viacom, may end up merging with CBS. Both companies were once joined and then split. Now, it’s looking like they could join up again.

All that figurative paper pushing isn’t conducive to getting things done. Even if the Viacom-CBS re-merger happens quickly, there’s bound to be a period of adjustment.

‘Playing Monopoly with real buildings’

Image for the official James Bond feed on Twitter

Image for the official James Bond feed on Twitter

For almost a year, there was supposed to be bidding by studios to be Metro-Goldwyn-Mayer’s partner in distributing Bond 25 and other future 007 movies. But real life has a way of intruding.

Two of the expected suitors, Paramount and Warner Bros., have seen their respective parent companies involved with real-life dramas.

Throughout much of this year, there was a fight for control at Viacom, which owns Paramount. Viacom’s CEO, Philippe Dauman, who had wanted to sell a big chunk of Paramount to outside investors, got his walking papers. Now, billionaire Sumner Redstone’s National Amusements Inc. wants to merge Viacom with CBS.

National Amusements controls both. At one time, CBS was part of Viacom. Then, they were split into separate companies. Now, they may be one again. (This FORTUNE.COM STORY has a summary of all this.)

On Thursday, Bloomberg reported that Time Warner, parent company of Warner Bros., has had talks with AT&T Inc. concerning “various business strategies including a possible merger.” According to the Bloomberg story, citing “people familiar with the matter,” Time Warner would be willing to sell for the right offer. The company rejected an offer from 21st Century Fox, parent company of 20th Century Fox, in 2014 for $75 billion.

Why should 007 fans care? Change of ownership or major structural change tends to be unsettling. It’s harder to make long-term moves if your company’s ownership may change. The separate intrigue at Viacom and Time Warner, may affect the ability of Paramount and Warner Bros. to do a Bond deal with MGM.

For now, there is nobody to release Bond 25. Sony Pictures, through its Columbia brand, has released the last four 007 films. But its most recent contract expired with SPECTRE.

At this point, neither the Viacom-CBS merger nor an AT&T-Time Warner deal have occurred (AT&T and Time Warner declined to comment on the Bloomberg story).

Still, all this wheeling and dealing recalls a line from Diamonds Are Forever about how reclusive billionaire Willard Whyte was said to be “playing Monopoly with real buildings.”

UPDATE (Oct. 21): The Wall Street Journal reported today that AT&T is in “advanced talks” to acquire Time Warner and that a deal could be reached as early as this weekend.

UPDATE II (Oct. 21, 10:20 p.m. ET): Reuters reported Friday night, citing people it didn’t identify, that AT&T has reached “an agreement in principal” to acquire Time Warner for $85 billion.

UPDATE III (Oct. 22, 7:40 p.m.ET): AT&T announces it has agreed to acquire Time Warner for $107.50 per share for a total of $85.4 billion. Time Warner shareholders will receive half in cash and half in AT&T stock, according to the statement disclosing the sales accord. AT&T said it expects the deal to close before the end of 2017.