MGM will enter into a pre-packaged bankruptcy and re-emerge between now and the end of October as a debt-free operation that will put much greater emphasis on developing programming — scripted and reality — for cable TV, according to a source familiar with planning for the Lion.
With Spyglass toppers Gary Barber and Roger Birnbaum having signed a nonbinding letter of intent to become co-chairmen and co-CEOs of the troubled studio, a search is under way for someone to oversee development of TV programming, the source said.
The two execs have emerged over the past month as the leading candidates to take over management of MGM following discussions with MGM’s largest creditors, which include Anchorage Advisors and Highland Capital.
Under its new structure, MGM would have a trifecta of executives overseeing film, television and digital, all reporting to Barber and Birnbaum. The top MGM TV slot is likely to be highly coveted in the industry since cable TV is increasingly seen as the platform for Hollywood’s creative talent at a time when movie studios are trimming their output.
The concept is that TV programs could be developed from MGM’s robust library, including “Robo Cop,” “Silence of the Lambs” and “Dances With Wolves.” Although MGM made its foray into television 55 years ago with ” MGM Parade” on ABC, its TV operations have never had nearly the success that the studio has enjoyed on the bigscreen. Currently, its “Pink Panther” and “Pals” airs on Time Warner’s Cartoon Network.
With a greater push in TV, MGM will be positioning itself to compete against mini-major Lionsgate, one of three bidders that made formal offers for MGM earlier this year. Lionsgate had TV success in recent years with “Mad Men” on AMC and “Weeds” and “Nurse Jackie” on Showtime. A combined MGM-Lionsgate would have included a library with more than 7,000 titles and the ability to produce and distribute MGM titles.
But while Lionsgate met with MGM debtholders about a possible merger, it withdrew from the bidding in March after it was asked to sweeten its offer — believed to be in the $1.3 billion-$1.4 billion range, far short of MGM’s target.
MGM had no comment Wednesday about the development, and reps for Barber and Birnbaum were not immediately available.
The Spyglass execs presented a plan on Aug. 18 for restoring the Lion’s roar to more than 100 creditors, who would absolve the studio of much of its $4 billion debt and take a majority equity stake in the company, along with providing some working capital. A major component of the plan is likely shuttering MGM’s distribution operation, with MGM’s slate distributed through another major.
The development comes a week before the Sept. 15 expiration of the forbearance on debt payments. The lenders are likely to be asked soon for another forbearance. The creditors have agreed six times to forgive debt payments since last September. A source said they most likely agreed because they realized the company was headed into an organized bankruptcy that would give them equity upon its emergence.
The studio was put up for sale in November but failed to draw bids that were high enough to satisfy the creditors, including a $1.5 billion offer from Time Warner last fall. MGM’s assets include the James Bond franchise and half of “The Hobbit” films, its name and logo, the United Artists operations, a library with more than 4,000 titles and a bare-bones film and TV operation.
MGM’s lone release this year, “Hot Tub Time Machine,” grossed $50 million domestically.