MGM sale conjures old ghosts, history repeats
By Bob Tourtellotte
LOS ANGELES, Sept 13 (Reuters) – Even in fast-paced Hollywood,
the more things change, the more they stay the same. Case in point:
80 year-old Metro-Goldwyn-Mayer Inc. <_MGM.N_ (aol://4785:MGM/) >.
The venerable film studio controlled by billionaire Kirk Kerkorian
on Monday agreed in principle to be acquired by investors led by Sony
Corp., according to sources close to the deal.
The nearly $5 billion deal recalls MGM’s origins in 1924, another
time when deep pockets were needed to compete against larger rivals.
The birthplace of musicals like “The Wizard of Oz,” epic “Gone with
the Wind” and home to the James Bond spy flicks, MGM has remained
a fixture in Hollywood through years of shifting owners, changed
locations and threatened bankruptcy.
In fact, the acquisition by Sony returns MGM to its old filmmaking
lot that was spun off in 1986 at a time when the studio was controlled
by Ted Turner. Since then, MGM has been a studio without a lot. Now,
like E.T., it has gone home.
MGM was formed in 1924 when financially struggling Metro Pictures
and owner Marcus Loew, who ran the New York-based Loews theaters,
approached Goldwyn Pictures about a merger.
Neither company was performing well at box offices, so they brought in
Louis B. Mayer, who along with his production chief, Irving Thalberg,
took charge of a merged Metro-Goldwyn-Mayer.
Legendary producer Samuel Goldwyn had been ousted from Goldwyn Pictures
two years earlier, and never worked at the company.
In the 1930s and 1940s, MGM became famous for producing spectacle
films and musicals like “Wizard of Oz” in 1939. That same year,
MGM and producer David O. Selznick released multiple-Oscar winner
“Gone With the Wind.”
MGM earned other best picture Oscars for 1951 musical “An American in
Paris,” starring Gene Kelly, and 1959 epic “Ben Hur,” with Charlton
Heston. In 1962, sister United Artists released the first of 20 James
Bond movies, “Dr. No.”
DEALS AND NEAR DISASTER
Kerkorian acquired 37 percent of MGM in 1969, then won control from
rival investor Edgar Bronfman Sr. He would own the studio three times
before this latest sale.
The 86-year-old billionaire is the son of Armenian immigrants and
made his early fortune in the airline industry. He also controls MGM
Mirage <_MGG.N_ (aol://4785:MGG/) >, operator of the Bellagio and
MGM Grand casino hotels, among others.
On Wall Street, Kerkorian is considered a wily dealmaker. In
complicated maneuvering in 1986, he sold MGM to Ted Turner’s Turner
Broadcasting System for $1.45 billion, then reacquired it from
Turner. But by then, Turner had stripped MGM of its pre-1948 film
library and sold MGM’s studio lot.
The deal formed the basis of modern MGM, which makes low-risk,
low-cost movies and cable and syndicated TV shows. It generates much
of its revenue from selling DVDs in its 4,100 title film catalog that
excludes classics like “Wizard of Oz.”
In 1990, Kerkorian sold MGM for $1.3 billion to Pathe Communications
and financier Giancarlo Paretti, but after losing money, French bank
Credit Lyonnais seized control then sold MGM back to Kerkorian in
1996 for the same $1.3 billion.
In 1999, the billionaire installed top lieutenant Alex Yemenidjian as
chief executive and Hollywood veteran Chris McGurk as chief operating
officer.
Helped by booming DVD sales, the pair have turned MGM into a steady
cash producer. Even so, in modern times MGM has been what old Metro
Pictures was, a small company looking for a big partner. On Monday,
it appeared to find one, again.
09/13/04 18:54 ET