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MGM on the Verge of Bankruptcy, Asks for Emergency Funds
September 25, 2009
Source: Deadline Hollywood
by Alex Billington
Back in 1924, Metro Pictures, Goldwyn Pictures Corporation and Louis B. Mayer Pictures merged together to form Metro-Goldwyn-Mayer, or MGM, with the motto, "Ars Gratia Artis", a Latin phrase meaning "Art for art's sake." Over the last 85 years, the studio has become one of the most powerful and recognized studios ever, probably because of their iconic logo (seen above) and roaring lion at the start of all of their films. Well, bad news, as Nikki Finke reports that the studio is "teetering on bankruptcy." Apparently they made a desperate call on Thursday asking for help rounding up an extra $170 million in emergency funds.
Most of the troubles involve the high end financial side of things (you read more at Deadline Hollywood), but here are the basics. MGM called bondholders today to make a "desperate plea for money because the studio had missed its numbers and was going to be out of funds very soon." They are in need of about "$20 million in short-term cash flow to cover overhead, and an additional $150 million to get through the end of year and continue funding its projects, and to start Peter Jackson's Hobbit." They're not blaming any one executive for any of the problems, but here's an example of some of the issues that are being brought up.
"They're not happy that [Harry] Sloan let the company go in this direction but they understand what’s going on. It’s unfortunate, but they get it that the company is in a distressed situation, and they have to figure out an action plan moving forward," a source explains to me.
MGM has a $3.5 billion debt and the bondhholders told MGM that, "in essence, that they were going to let the studio go bankrupt." But, of course, Stephen F. Cooper, a restructuring specialist, explained that "this would be the worst possible outcome for the creditors and the company." Reason being that if they were forced into bankruptcy, they would lose James Bond and "the studio doesn't think it can stay alive without 007." Not to mention, The Hobbit could run into problems as well, considering that project is mostly funded by MGM, since New Line already got swept into Warner Bros a few years back. What are they going to do?
To be honest, MGM hasn't been doing well in recent years. In fact, in my mind, they're not a real studio anymore, in a distribution sense. All they really do is buy up titles, fund a few projects, and "distribute" a few flicks (not successfully), although they're usually partnered with other studios (e.g. Sony for Bond, United Artists for Valkyrie, etc). Their upcoming projects include The Three Stooges, Cabin in the Woods, Hot Tub Time Machine, and Red Dawn - a strong set of titles but nothing that sounds like it'll save them. Considering their history I hope they stick around, but at this point, I just don't know what will happen.
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Reader Feedback - 13 Comments »
1
Can I get some emergency funds? I'm pretty skint too.
If The Three Stooges, Cabin in the Woods and Red Dawn never get made It'd make for a better world, let em drown.
Crapola on Sep 25, 2009
2
a movie world with out MGM?
that's pretty crazy to think about. Really i don't care if they sink but if they take The Hobbit and 007 with them them I'm going to be PISSED
DoomCanoe on Sep 25, 2009
3
Nothing lasts eternal!
pipo on Sep 25, 2009
4
#1,
I've read the script for Cabin In The Woods and it's pure brilliance. Plus, it's already in post production. In fact, the script for Cabin was so strong that I reckon' it will change how horror is viewed. It's not going to do great in the box office though, i'm calling that right now. The DVD sales will be great though.
crumb on Sep 25, 2009
5
Let 'em drown. Maybe if some of the larger studios go down, then we'll see more awesome indie flicks. Yeah!
Mr. Gone on Sep 25, 2009
6
"The Three Stooges, Hot Tub Time Machine, and Red Dawn - a strong set of titles"
Say what?! I'd say these 3 are as good an example of why they're tanking as any…
This had better not kill the Hobbit project though. If they are really going under, someone had better step in and pick up The Hobbit.
Fed Up With Hollywood on Sep 25, 2009
7
Doesn't DISNEY have stock in MGM…I mean MGM Studios. Can't Disney bail them out?
JEFFREY on Sep 25, 2009
10
Quick look up on IMDB and their recent(-ish) theatrical distributions were The Pink Panther 2 (2009), Distributor (2008), Valkyrie (2008), Soul Men (2008), The Other End of the Line (2008), How to Lose Friends & Alienate People (2008), The Betrayed (2008), Igor (2008), The Longshots (2008), College (2008)
They produced The Taking of Pelham 1 2 3 (2009), Legally Blondes (2009), Against the Dark (2009),
The Pink Panther 2, Hit and Run (2009), To Live and Die (2009)
and they are suprised that they are going bankrupt because….?
Now 007 franchise is awsome, the hobbit might be good, and on a personal note they are producing and untitled stargate SG-1 project… but other than that they have wasted their money
For regular people bankruptcy is the loss of everything, for corporations it seems to be a fresh start… it shouldn't be that way, maybe if they were concerned about putting out good product they would be supported by filmgoers
let them cave, they burned their own matchstick house down
Janny on Sep 25, 2009
11
In Soviet America… movie studio bankrupts YOU!!
bozo on Sep 25, 2009
12
#5 you're an idiot
#10 true that
poor kitty…
branden on Sep 25, 2009
13
Disastrous to see MGM go down in flames. But looking at their recent list of releases (Bond excepted), it's not really surprising. Hits not bombs are needed to stay afloat in Hollywood. After 85 years they should know that.
snickers on Sep 28, 2009