After eleventh-hour maneuverings, MGM last week squeezed the offering through shaky financial markets, netting just $250 million–about the cost of one out-of-control movie production. In today’s Hollywood moviemaking is for the fearless rich or the certifiably insane. Costs are soaring; profits are mostly nil. At Time Warner and the other behemoths that dominate entertainment, theme parks, cable networks and retail chains fatten the bottom line, not movies. At MGM the picture is different. Its assets plundered, exploited and repeatedly sold, the studio has been reduced to trying to survive largely on celluloid.
Can MGM mount a comeback? Never say never again, its backers reply. Chief among them are Kirk Kerkorian, a shrewd billionaire who has thrice owned MGM, and Frank Mancuso, the former Paramount chief who heads MGM’s savvy management team. They are betting on a recovery strategy that involves recapturing the valuable rights that Kerkorian and subsequent owners peddled. Then, of course, there’s Agent 007. MGM is hoping for a quick cash flood from ““Tomorrow Never Dies,’’ a Bond film opening next month. MGM has plans to neutralize Sony, too. MGM sources say the studio intends as early as this week to sue Sony over the Bond rights, which have been in dispute for years.
It’s a jungle out there. And 73-year-old MGM, whose trademark is a lion, hasn’t been king of it since the 1930s and 1940s, when it was the world’s largest, wealthiest studio. Today, the lion barely meows. Since 1992 MGM has hemorrhaged $1.7 billion. It warns of losses ““for at least several years.’’ Debt totals almost $1 billion. Much of the decline has come under the ownership–or in the shadow–of Kerkorian, who first purchased control of MGM in 1969 and later United Artists. In the 1980s he sold both to Ted Turner but kept portions of the film library and repurchased the name and logo. In 1990 he sold his holdings again, to Giancarlo Parretti. Parretti, in turn, licensed the studio’s television and video rights to others before his lender seized the company in 1992 and installed Mancuso. Things brightened briefly as MGM/UA produced such hits as ““The Birdcage,’’ ““GoldenEye’’ and ““Get Shorty.’’ Last year Kerkorian emerged to reacquire control. He invested more this year for MGM/UA to acquire Orion Pictures. And last week he purchased 3.5 million of the 12.5 million shares MGM had originally planned for the public offering. In all he has invested about $1 billion.
Kerkorian’s supporters say he wants to restore MGM/UA to its past glory. Retrieving the television and video rights to the movies of its heyday is the key. Those rights begin to revert to MGM now through the first decade of the next century. As a result, the studio will have an extra $80 million to $100 million in cash flow by 2003. With the assets back in hand, Mancuso’s team plans to launch cable networks and expand abroad. There are plans to slap the lion logo and trademarks such as MGM’s Pink Panther character on merchandise or on theme restaurants.
In the meantime, the risky business of movies must pay the freight. And the studio is ramping up to release 16 to 18 movies a year, with 11 already scheduled for next year. ““Looking at the production slate,’’ sniffs a powerful Hollywood agent, ““I don’t see any breakout hits. And recent releases have been pretty inauspicious.’’ With little to fall back on, the MGM lion can’t afford many stumbles.
