MGM on the Verge of Bankruptcy, Asks for Emergency Funds
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.