Studio's revival boosted by cash cache
The Lion should be tearing its hair out.
With the economy in shambles and Hollywood getting hit hard by the credit crunch, MGM is hardly in a prime spot to be trying once again to reboot itself.
Yet there’s confidence in MGM’s roar these days. The studio is moving forward with plans to produce its first slate under Mary Parent’s leadership backed with enough coin in its coffers to release the pics in 2010.
The studio has fastracked an adaptation of Robert Ludlum’s “The Matarese Circle,” helmed by David Cronenberg and to star Denzel Washington. If greenlit, that would be MGM’s third major film set to go into production next year.
It also has a redo of “RoboCop” in the works with Darren Aronofsky and new versions of “Poltergeist” and “Red Dawn,” as well as laffer “Zookeeper” with Walt Becker, and the thriller “The Cabin in the Woods” that Joss Whedon co-wrote with “Cloverfield’s” Drew Goddard, who will direct.
All are projects — some even potential franchises — that Parent hopes will help put the studio back on the map as a major producer and distrib of pics (around 10 per year) that perform at the B.O. and get it away from the rent-a-studio system, or third-party deals, it was previously relying on.
It recently ended a disappointing three-year pact with the Weinstein Co. three months early because of a pay TV deal Harvey and Bob Weinstein brokered with Showtime.
United Artists remains a separate specialty label that produces its own pics for MGM’s release sked with its own coin; it bows the Tom Cruise thriller “Valkyrie” on Dec. 26.
The film’s been under a microscope from day one and recently overhauled its marketing campaign after initial materials failed to generate the kind of heat the studio was looking for.
With Parent’s involvement, “Valkyrie” is now billed as a taut World War II thriller reminiscent of “The Dirty Dozen” or “The Great Escape,” rather than a talky drama in the vein of “Lions for Lambs.”
Having MGM back in action has dealmakers around town breathing a sigh of relief. A revived Lion means another buyer for projects at a time when the majors are cutting back and indie outfits are shuttering.
That’s especially true considering MGM is willing to spend enough to land prime projects; it outbid several studios to pick up “Matarese Circle.”
While MGM still needs to prove itself to the biz — its upcoming slate needs to perform — the company has made inroads in the six months Parent has been at the helm.
“MGM doesn’t need to be as aggressive as they once were because they have legitimized themselves,” says George Heller, a lit manager at Principato-Young. “People take them a lot more seriously than when they first ramped up. A lot of companies are sort of posturing. They’ve made good on their promise.”
And one promise is that they have enough money to make movies — for now.
MGM is operating with a revolving $250 million line of credit from J.P. Morgan and has $200 million more in equity to use for P&A.
It’s also able to tap into the $500 million fund from Merrill Lynch that specialty arm United Artists is using from J.P. Morgan to fund its slate of pics, says MGM chairman and CEO Harry Sloan. However, any pic that MGM makes through that fund would have to be released under the UA label.
It just needs to make the movies now.
“We’ve got the funding, we just need to mobilize the projects,” Sloan says.
MGM knows it doesn’t have all the funding it needs, however.
While it has enough to produce mid-range pics, Sloan is still trying to close on a new $500 million fund to pay for tentpoles like new installments of the James Bond franchise, which it gets back from Sony after “Quantum of Solace,” as well as Guillermo del Toro’s “The Hobbit.”
For months, the studio has said it’s close to closing on a new fund that would be backed by several investors.
Last month, it killed off speculation that Indian entertainment conglom Reliance ADA Group and DreamWorks-backer was one of those companies.
Either way, it needs its new slate of films to start delivering. And soon.
It’s trying to manage a $3.7 billion loan that comes due in 2012, on which it pays $300 million a year in interest.
Rumors keep emerging that the Lion is back on the block and could be sold yet again. Its library of more than 4,000 titles is just too good to pass up for some buyers. While MGM is adamant that it’s not for sale, industryites say no entity is ever not for sale in Hollywood.
“No one wants to see MGM go under,” says one rival studio exec. “But that’s the thing, it never does. It always finds another buyer. If Mary’s movies don’t work, it will find another way to start over and try all over again.”
Tatiana Siegel contributed to this report.