Metro-Goldwyn-Mayer, the studio that gave us the world's most famous spy, is flirting with insolvency and on the edge of bankruptcy.
The Financial Times reports that the home of such classics as Silence of The Lambs and The Good, The Bad and The Ugly has accumulated $3.7 billion in debt. MGM's problem is that it can't make its regular interest payments. Those payments are supposed to come out of the revenues from its 4000-title film library. Trouble is the revenues have almost halved in the past 12 months. Last year, the company collected $250m from those revenues, short of the $300m needed every year to service that debt. The money comes from people buying MGM's DVDs. But these days, they're not buying. Consumers have either run out of space on their shelves or spend their money on other forms of entertainment, or just getting the movies online.
Even the studio's most prized asset, the James Bond series, has been postponed indefinitely by the Broccoli family of producers, which shares the rights with MGM, because of the uncertainty surrounding the studio.
MGM will have to either find a new source of capital or some studio stupid enough to buy it. It looks like it will be the latter. As reported here, Lions Gate, the company behind the Saw horror franchise and the Mad Men TV series, is one of three potential buyers.
Watch this space.
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