MGM Ponders Possible Sale of its Studio and its Entire Slate of Films & TV Series

MGM Holdings Ponders Sale of MGM, its Films, and TV series

The coronavirus pandemic may be slowly claiming another victim, a big one, in the entertainment industry. MGM Holdings, the company that owns Metro-Goldwyn-Mayer Studios Inc. (MGM), is thinking of selling the American media company and its stockpile of film titles and TV series titles. The films and TV series include: The Rocky film franchise, The Lord of the Rings film franchise, co-ownership of the James Bond film franchise, the Poltergeist film franchise, The Handmaid’s Tale TV series, the Vikings TV series, and many other films and TV series. In all, 4,000 film titles and 17,000 hours of television.

With MGM Holdings not able to release the latest Bond film No Time to Die, its debt increasing by the month, and Anchorage Capital Group, MGM’s biggest share holder wanting to off-load down-dragging MGM from its books, MGM has tapped “investment banks Morgan Stanley and LionTree LLC and [has] begun a formal sale process.”

The sales rumors have been floating around for sometime, growing stronger during the pandemic, because of the current marketplace. If MGM was ever to get a premium price for its product, during this new high point in the streaming wars would be it. Streaming services are hunger for new, high-end, exclusive content. MGM has that content but the question is how much others are willing to pay for it? MGM could purportedly sell for $5.5 Billion, including the debt it has accumulated.

The Walt Disney Company paid over $4 billion for Lucasfilm and its catalogue and then bought Fox’s catalogue of films and TV series for $71.3 billion. Amazon paid $100 for the right to The Lord of the Rings TV adaptation. Disney and Amazon have a history of paying large cash sums for streaming properties. Out of the two, Amazon is the only one, financially, able to come to the table with MGM. Disney faces two problems in that regard: 1.) they have been kicked in the pants by the pandemic e.g. no theme park or blockbuster money this year, and 2.) they are focusing their cash on creating new original content on Disney+, content cheaper to create (and smarter to create) than buying content that people have already seen (e.g. MGM’s library). New, original content is better than old, previously-viewed content. Disney+ learned that lesson after purchasing Fox’s content.

In addition, where would Disney air all of that MGM content? All the R-rated content would become Hulu exclusives or it would be ridiculously censored on Disney+ like Splash (why have the film on Disney+ if you are going to do that to it? Why not just air it on Hulu?)

Netflix can’t purchase MGM because they are in too much debt, constantly creating new TV series and original films for its streaming service. There is no way Netflix could add over $5 billion to their per-existing debt load. They would never get out from under all of that debt. The same can be said for HBO Max, owned by AT&T. Because of AT&T’s current debt load, they are out of the running for MGM as well.

That leaves Apple, who is sitting on a lot of cash and whom is a distant thought in the streaming wars, Amazon, who certainly has the cash and whose cash flow has benefited greatly from the pandemic, and Disney, who might say “to hell with it,” and decide to add to the forward momentum that they generated when they announced 9 new Star Wars TV series and a gaggle of others projects exclusive to Disney+ with a bid and purchase of MGM’s content.

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