http://news.yahoo.com/news?tmpl=story&u=/nm/20040914/media_nm/media_mgm_sony_dc_19

LOS ANGELES/TOKYO (Reuters) - A group headed by Sony Corp (NYSE:SNE - news) (news - web sites). of America has agreed to buy Hollywood film studio Metro-Goldwyn-Mayer for about $2.85 billion in cash to mine MGM's lucrative library for the booming DVD market.



MGM, the 80-year-old studio that owns the James Bond movies, said on Monday that the unit of Japanese electronics giant Sony Corp. would be joined by Providence Equity Partners Inc., Texas Pacific Group and DLJ Merchant Banking Partners.


Sony said it had reached a separate agreement with the top U.S. cable TV operator, Comcast Corp., for Comcast to offer Sony and MGM movies over its video-on-demand systems and on new cable channels that it would form with the Sony group.


Emerging as victor in a drawn-out acquisition battle with Time Warner Inc, Sony will join forces with MGM to create the world's largest film library of about 7,600 titles, comprising some 3,500 movies from Sony and about 4,100 from MGM.


Sony will pay $12 cash per share for MGM, controlled by billionaire Kirk Kerkorian, and assume about $2 billion of debt.


With roughly 237.6 million MGM shares outstanding at the end of July, the total value of the deal is about $4.85 billion.


The purchase of MGM is in keeping with Chief Executive Nobuyuki Idei's vision of creating synergies between Sony's consumer electronics products and music, movies and games.


But investors said it would be some time before the potential merits of the deal become clear.


"This will obviously help diversify earnings and it's an important library, an important source of content," said Marc Desmidt, head of Japanese equities at Merrill Lynch Investment Managers in Tokyo. "But I've got no idea (right now) if they've overpaid or not -- whether it's the right price."


Some analysts had questioned the logic of the deal for Sony, saying the company should be concentrating management resources on its struggling electronics division, which accounts for $45 billion or two-thirds of the company's total sales.


Sony's shares slid 1.52 percent to 3,890 yen on Tuesday, underperforming the Nikkei average, which rose 0.38 percent.


Credit rating agency Standard and Poor's said after the market close that it had put Sony on watch for a possible downgrade because the acquisition could cause deterioration the company's balance sheet and hamper structural reform.


Sources close to the bid said Providence would contribute $450 million, Sony and Texas Pacific $300 million and DLJ Merchant Banking $250 million. The balance would be in debt.


CROWN JEWEL


MGM's film library is considered its crown jewel, generating a stream of revenue in the DVD market.


Sony could also plumb the MGM library for sequels, and MGM's trademark Leo the Lion is a globally recognized brand.


Including the titles owned by Sony Pictures Entertainment, the Sony group will now control about 40 percent of all movies ever produced by Hollywood, according to some estimates.





Sony, which bought Columbia Pictures in 1989 for $3.4 billion, will control the MGM venture. Comcast will manage the joint venture the two concerns will form for cable TV.

An agreement, if finalized, would mark a sweet payout for 87-year-old Kerkorian, who holds a 74 percent stake in MGM and stands to make about $2 billion on the deal.

Earlier this year, he pocketed about $1.4 billion through an $8 per share dividend, meaning he'd walk with about $20 per share for owning the studio a third time in its long history.

The announcement of the deal by MGM came after Time Warner withdrew, saying it could not reach agreement on price.

Time Warner, the world's biggest media group, had offered $4.6 billion, according to one source.

The company is now free to focus on a pending auction for bankrupt cable operator Adelphia Communications.

For Sony, owning MGM could also advance its cause in the battle to establish the next DVD format.

Sony is part of a consortium that supports the Blu-ray format against a format called HD DVD, which is endorsed by Japan's NEC Corp. and others.

Both HD DVD and Blu-ray technologies use blue laser light, which, with a shorter wavelength than red light used in conventional DVD recorders, can read and store data at much higher densities needed for high-definition recordings.

"A close relationship with holders of movie content will be necessary to win the DVD format fight. The purchase of MGM can be viewed as positive in that light," said UFJ Tsubasa's Yamamoto.

Sony and its partners have locked in financing from J.P. Morgan Chase & Co. and Credit Suisse First Boston for the bid, sources close to the talks said. J.P. Morgan is also leading debt financing for the deal.

Shares of MGM closed up 44 cents at $11.55 on the New York Stock Exchange. Time Warner stock was off 6 cents at $16.45.

MGM said the buyers had put down a deposit of $150 million, and added that management would likely recommend approving the proposed deal to its board of directors by Sept. 27.

MGM, formed in 1924, produced such classics as "Gone With the Wind" and "The Wizard of Oz."

Kerkorian first bought it in 1970, then sold it to Ted Turner in 1986 before buying it back, only to sell it again in 1990 to Pathe Communications. He re-acquired the studio in 1996.

(Additional reporting by Dane Hamilton and Kenneth Li in New York and Julie MacIntosh in Philadelphia)

So thats why Disney is getting rid of MGM

This means then that the rights for 'The Hobbit' are still split. Still though, it should be interesting to see how this all goes. The MGM logo is still going to be on the movies (and the lion's roar too apparently), but Sony is running things now. There's a 6 month transition period- after that it should be interesting to see what happens in terms of sequels, remakes, and the Bond franchise. Hopefully this will improve the quality of the films made, having more resources.

I read somewhere that when MGM was sold in the 70's many lots were demolished for re-development, and many of MGM's archives supposedly dumped into a hole and built over. I hope it's not true- it would be a shame to think that the 15 missing minutes of The Wizard of Oz are underground (and wasn't 'A Star is Born' also MGM?).

Let's remember that Time Warner has owned the majority of pre-'80s MGM titles since the '90s.

Originally posted by Mr. Stefani
So thats why Disney is getting rid of MGM Disney never owned MGM.

Makes me wonder if were going to re-release all of MGM's movies under the new Sony label now. We just re-released Silence of The Lambs, Dances With Wolves, Platoon and others under the MGM label (from Orion Home Video). Are they going to be re-released under Sony's name now? I wouldn't be surprised. :rolleyes:

I remember back years ago where cable mogul, Ted Turner already had hundreds of old MGM movies from way back when. Turner was the company that owned the pre-80's MGM movies from "The Wizard of Oz", "Singin' In the Rain", "Meet Me in St. Louis", "Camille" and others. Of course, you're right. MGM did buy Sony. I remember there was a scene in the movie "Annie" where Daddy Warbucks, Annie, and Punjab went to Radio City Music Hall and the Rockettes came on singing "Let's Go to the Movies". After the song, the MGM logo came on and a movie snippets from a Greta Garbo film "Camille" was on during a scene in that movie. That film was from Columbia (in which Sony Pictures owns the company). I hope Columbia will do better with MGM and Sony. This is what it says in an in-store promotion at any store:

MGM AND SONY MEANS GREAT MOVIES :lol:

I think that this is what the old logo that it was originally used back in the 40's where they showed those old movie musicals with Judy Garland, Gene Kelly and those other ones.:)

Originally posted by AKA
Let's remember that Time Warner has owned the majority of pre-'80s MGM titles since the '90s.

Disney never owned MGM.

I know but they're doing away with the Disney MGM's Studios name in Florida. They're calling it The Disney Studio's now.

Originally posted by Mr. Stefani
I know but they're doing away with the Disney MGM's Studios name in Florida. They're calling it The Disney Studio's now. Oh, okay. Gotcha.

Originally posted by Full House
I think that this is what the old logo that it was originally used back in the 40's where they showed those old movie musicals with Judy Garland, Gene Kelly and those other ones.:) Dude, when one takes a picture of a TV broadcast with a regular camera or webcam, it always turns out ******. Here you go:

Originally posted by AKA
Dude, when one takes a picture of a TV broadcast with a regular camera or webcam, it always turns out ******. Here you go:

Thanks!:) But I have video tapes that have an MGM brand on it. I remember back many years ago that I usually bought 8-pack blank MGM video tapes. That has the same logo that you posted. That blank MGM tapes looks so strange. I have eight of them that I copied from TV years ago that it was not MGM related, but it just Disney movies. Look at this picture.