FILM-MAKING BROTHERS Tony and Sir Ridley Scott have emerged as surprise contenders to steer Metro-Goldwyn-Mayer (MGM)back to solvency after submitting a restructuring plan to the ailing Hollywood studio’s lenders.
The brothers, who between them are responsible for hits that include Alien, Top Gunand Gladiator, have expressed interest in running MGM, according to several people familiar with the situation.
MGM, struggling under a $3.7 billion (€2.8 billion) debt burden, is in the hands of its creditors after it became clear it could not meet its repayments. Companies in the Sony-led consortium that paid $5 billion for the studio five years ago, including TPG and Providence Equity Partners, have seen their equity wiped out.
The studio, which owns the James Bondseries and produced classics such as The Wizard of Oz, is on the auction block. Time Warner led the bidding with a $1.5 billion offer, but creditors were underwhelmed and are leaning towards a debt-for-equity swap and an injection of new capital to create a standalone company with a reduced debt burden.
Steven Cooper, the restructuring specialist who oversaw the bankruptcy of Enron, is managing the sale and is acting as interim chief executive. He is likely to oversee a transition until a new management team – possibly including the Scott brothers, who would oversee production – and a new chief executive are in place. “MGM needs a chief executive that Wall Street knows and respects,” a person familiar with the matter said.
The creditors have not decided whom to approach for the chief executive role. Jonathan Dolgen, former chairman of Paramount Pictures, has been mentioned, as has Roger Birnbaum, chief executive of Spyglass Entertainment.
The Scott brothers have their own production company, Scott Free, but it is unclear whether their proposal would involve combining it with MGM or if they are seeking a stake in the recapitalised studio. They could not be reached for comment.
Their interest in MGM has lent weight to creditor plans to keep the company alive through a debt-for-equity swap. MGM has a range of suitors willing to invest equity in a new business: Access Industries, News Corporation, Qualia Capital and Relativity Media, which is backed by Elliott Associates, have all expressed interest. – (Copyright The Financial Times Limited 2010)
