Time Warner Inc. withdrew its bid for Metro-Goldwyn-Mayer on Monday and Sony Corp. rushed in to buy the studio for nearly $5 billion, VARIETY reported. The deal provides Sony with the largest library in Hollywood (nearly 8,000 films) along with valuable assets to set up TV distribution deals, and the chance to own such mega franchises as the James Bond film series.
Sony and its partners -- lead private equity investor Providence Equity Partners, Texas Pacific Group and DLJ Merchant Trading Partners agreed to $12 a share for MGM, which amounts to $2.94 billion, plus the assumption of $2 billion in debt.
Key to the deal was Comcast Corps agreement to package a new cable channel and video-on-demand venture for its 21.5 million subscribers combining the film libraries of Sony and MGM (around 4,000 each). Comcast was striving for a similar TV venture when it proposed buying Disney.
Appaently there will be a transition period to accommodate films in the MGM pipeline, but by next year MGM films will be released through Sony Pictures divisions, though they still will carry the MGM label. After 2005, that label and the roaring Lion would be put to rest.
The James Bond franchise will be negotiated under a separate deal with the Broccoli family, but future Bond films will be handled by Sony releasing under the MGM name.
Still unclear is whether any of MGM's approximately 1,300 employees will survive the transition, including studio heads Alex Yemenidjian and Chris McGurk.
In a prepared statement, Dick Parsons, Time Warner chairman and ceo, said: "Although MGM is a valuable asset, we have decided to withdraw our bid. As we pledged to our shareholders, we approach every potential acquisition with strict financial discipline. Unfortunately, Time Warner could not reach agreement with MGM at a price that would have represented a prudent use of our growing financial capacity. We are confident that there are other capital allocation choices that will enable us to continue to build shareholder value."