With MGM’s future still murky, Mary Parent has departed as head of its mothballed film production arm.
Parent, who had been chair of the motion picture group and co-CEO, cleared out of her office Friday after 2 1/2 years at the beleaguered studio.
Her departure came as the studio disclosed that MGM’s debtholders will have an additional week to consider a bankruptcy plan that would leave Spyglass Entertainment toppers in charge — a sign that a recent rival merger proposal from Lionsgate may have gained traction among the MGM lenders.
The Spyglass plan would take MGM into a pre-packaged bankruptcy that would wipe out the MGM equity and leave Spyglass toppers Gary Barber and Roger Birnbaum in charge with a 5% stake. MGM’s more than 100 lenders have
until Oct. 29 to endorse the Spyglass plan.
MGM said in Friday’s announcement that the extra week was needed due to supplemental information to the Spyglass solicitation package. The studio made no mention of the Lionsgate proposal, which emerged a week ago after the Spyglass plan had been sent to debtholders.
Carl Icahn, a major Lionsgate shareholder who’s battled management on several fronts in recent years and holds a significant amount of MGM debt, has been pushing for the Lionsgate merger. Also, the Los Angeles Times reported that MGM debtholder Franklin Templeton Investments had sent a letter to the studio’s board on behalf of other creditors asking for a three-week delay in the Spyglass vote so they would have time to consider the rival bid.
Lionsgate’s proposed merger would leave the debtholders with a 55% stake — and create an MGM-Lionsgate with Lionsgate’s existing film and TV production arms and a massive combined library.
MGM had no comment about Parent’s exit, which came following a year in which MGM released only one movie — “Hot Tub Time Machine” — and completed three other films awaiting release (“Red Dawn,” “Cabin in the Woods” and “The Zookeeper”). But Parent’s departure wasn’t a surprise given that film production is in limbo while MGM in the midst of sorting out its fate with debtholders.
Parent, who had spent more than a decade as a Universal exec and producer, began her MGM tenure in early 2008 at the behest of then-chairman Harry Sloan, with marching orders to ramp up production. She moved quickly to start developing projects such as “The Three Stooges,” Robert Ludlum’s “Matarese Circle” and reboots of MGM titles such as “RoboCop,” “Red Dawn” and “Pink Panther” — and also inherited a reinvention of “Fame.”
Parent also tapped studio vets Cale Boyter on the production side and Mike Vollman on marketing to help handle the revived slate. But MGM’s financial difficulties — a combination of debt payments from the $4.8 billion 2005 buyout and the decline of the DVD market — made it difficult for Parent’s team to move forward on all but a few projects.
MGM brought in turnaround specialist Steve Cooper in August 2009, saw “Fame” perform meekly in September and put itself up for sale in November. By the end of last year, Parent had retained influential attorney David Boies. Sources said Friday that she has another 18-20 months on her contract.
MGM’s “Zookeeper,” starring Kevin James, was co-financed by Sony and won’t be out until July. Neither the studio’s remake of “Red Dawn” nor horror movie “Cabin in the Woods” has a release date.
Early speculation among insiders was that Parent — who remains well regarded within the industry — has already been offered a producing deal at one of the majors.
As for MGM’s immediate future, it’s mum as to how the new bid from Lionsgate would be handled. Lionsgate has had no comment on MGM’s one-week extension of the deadline.
Lionsgate’s three largest shareholders — Icahn, Mark Rachesky’s MHR Fund Management and Gordon Crawford’s Capital Research Global Investors — support Lionsgate’s merger proposal, which offers about $1.8 billion in stock and debt.
Wall Street appeared to endorse the Lionsgate-MGM deal Friday, with Lionsgate shares rising 21¢ to $7.65 in trading on the New York Stock Exchange. It was a two-year high for the stock and 15¢ higher than Icahn’s tender offer for all the shares.
Also on Friday, Standard & Poor’s Ratings Services issued an improvement in its outlook for Lionsgate (current credit rating: B-) in the wake of the merger proposal. S&P had placed the rating on CreditWatch with negative implications in March after Icahn launched his first hostile takeover offer.
“MGM has one of the industry’s largest film libraries, and it produces the lucrative James Bond films,” S&P said. “A combination with Lionsgate would bring significant additional film library assets and cash flow but could entail substantial production funding and financing needs if the new company’s management pursues an active production strategy under the MGM brand.”