MGM For Sale

First round bids are due by the end of the week in the auction of debt-laden film studio Metro-Goldwyn-Mayer, and nearly a dozen prominent Hollywood and media names have submitted offers,

Among the companies making offers or weighing bids for the storied studio are Time Warner Inc.; Lions Gate Entertainment Corp.; News Corp., owner of The Wall Street Journal; Summit Entertainment; Liberty Media Corp.; CBS Corp.; AT&T Inc. and Indian conglomerate Reliance Industries Ltd., these people said. They said former News Corp. President Peter Chernin and former Yahoo Inc. Chairman and Chief Executive Terry Semel also have expressed interest.

The bids are in the $2 billion range, the people said, far below the $3.7 billion MGM owes its bank lenders. Some could come in below $1.5 billion, they said.

The studio, which has enlisted turnaround specialist Stephen Cooper to help it restructure, faces debts of $3.7 billion stemming from a 2005 buyout and a $250 million revolving credit facility maturing in April.

The auction of MGM has limped along in part due to limited financial and operational disclosures from the studio, people involved in the process said. In particular, the potential bidders are eager to see more detail about the studio's distribution rights, known as "avails" in Hollywood parlance.

MGM is owned by a group including private-equity firms Providence Equity Partners and TPG Inc. and media companies Sony Corp. and Comcast Corp., which bought it for $2.85 billion and assumed $2 billion in debt as part of the deal.

MGM released just one film last year, a remake of the 1980s musical "Fame," which underperformed at the box office. The studio's most valuable asset is its film library, which includes some 4,000 titles, including the James Bond and Pink Panther franchises. MGM also owns a piece of the two "Hobbit" films to be produced by "Lord of the Rings" director Peter Jackson.

(Source: The Wall Street Journal)