LONDON — MGM is aiming to generate almost $500 million a year in cash flow, compared with $100 million before its revamp under current MGM chief Harry Sloan.
At the European Media Leaders Summit in London, Sloan said most of the coin will be used to service MGM’s $3 billion debt load. “What’s left goes on the screen.”
In London for the world premiere of “Casino Royale,” Sloan highlighted MGM’s five core franchises — James Bond, “The Pink Panther,” “Thomas Crown,” “Rocky” and “The Hobbit.”
Next year is likely to see MGM go into production with new installments of the first three.
In a radical rethink of the studio’s business model, Sloan has cut MGM’s investment in film and TV production from $700 million a year to just $100 million.
Overhead has been slashed from $270 million to $115 million. The staff has shrunk to 400 from about 1,400.
He reiterated the Lion’s strategy of cutting down development and production in favor of distribution.
“It’s no secret that the Hollywood business has been in turmoil,” he said. “The DVD business has flattened out prematurely. There are labor difficulties on the horizon; I think there’s a very good chance there’s going to be a strike; this is probably the worst period of relations between talent and the studios. Piracy — you’ve heard about all the issues.”
Against that bleak backdrop of a studio system Sloan describes as “broken,” he and his partners “had a chance to analyze and to challenge every single assumption by which a studio operates,” he said, to “create a modern, businesslike studio model.”
Now the bulk of MGM’s slate comes from independent producers and financiers, such as the Weinstein Co., Lakeshore and Sidney Kimmel.
MGM will invest in two or three tentpoles of its own every year.
Steve Martin recently delivered a script for the latest “Pink Panther,” where his Inspector Clouseau teams up with equally bumbling detectives from other European countries to defeat a continent-wide crime wave.
Shooting is expected to start in February.
The next “Thomas Crown,” starring Pierce Brosnan, is scheduled for March, with a likely budget around $100 million.
Daniel Craig will return in the sequel to “Casino Royale.”
Sloan said “Rocky Balboa,” which is set for release next year, will probably be the last installment in that franchise, because Sylvester Stallone’s title character will be too old for the ring.
As for “The Hobbit,” Sloan confirmed MGM was in talks with Peter Jackson to make two movies based on J.R.R. Tolkein’s “prequel” to “The Lord of the Rings.”
However, making the film is contingent on negotiations with New Line, which owns the right to produce “The Hobbit” (MGM owns only the right to distribute the films). And people close to Jackson say that until his ongoing lawsuit with New Line — over monies he says are owed him from the “Lord of the Rings” franchise — is settled, a serious conversation over “The Hobbit” cannot proceed.
Even so, Sloan remains optimistic. He said the first “Hobbit” pic would be a direct adaptation of “The Hobbit,” and the second would be drawn from footnotes and source material connecting “The Hobbit” with “The Lord of the Rings.”