Leo the Lion, the famed Metro-Goldwyn-Mayer mascot, has a droop in his tail these days, Dorothy can't get back to Kansas, and Miss Moneypenny has frozen James Bond's assets. All are in suspense while a different kind of drama has been playing out over the future of MGM, the most illustrious of the prewar studios. Its publicity department once bragged the studio had "more stars than there are in heaven."
Five years ago, things still looked fairly starry when MGM was bought for $4.85-billion (U.S.). But this past Wednesday, the company filed for bankruptcy, with an accumulated debt of more than $4-billion. That leaves its creditors as owners of a restructured studio, to be managed by Gary Barber and Roger Birnbaum of Spyglass Entertainment ( Sea Biscuit, Star Trek), with the bankers and hedge-fund managers watching over their shoulders.
There was an exciting 11th-hour rescue attempt when one creditor, Carl Icahn, pushed for a merger with Lions Gate Entertainment (which must have cheered Leo the Lion), but Icahn ultimately supported the deal with Spyglass. Once through the bankruptcy process, MGM announced, it plans to raise $500-million to finance new movies and television shows.
Just to review: Bought for nearly $5-billion five years ago, MGM went more than $4-billion into debt, and now plans to raise $500-million? If this were the plot of a movie, you'd assume the continuity girl fell off her chair and hit her head. What happened?
MGM has been in decline since the 1950s and, like other studios, it morphed into a business that made movies among other things. Nevada investor Kirk Kerkorian bought the studio in 1969 primarily for its real estate and to put its name on one of his casino-hotels in Las Vegas. The studio switched owners a couple of more times in the eighties and nineties (Ted Turner, Italian financier Giancarlo Parretti) before it ended up back with Kerkorian.
The great miscalculation came in 2005, when Kerkorian sold the company (already carrying about $2-billion in debt) to a group of investors that included three big hedge funds and Sony Corp., which wanted to use MGM's library to support the sale of its Blu-ray disks. The business plan relied on MGM's library of 4,100 films and 10,000 television episodes, which were generating about $500-million in sales every year. But to get good prices from television and cable channels from their catalogue, the studio needed to package them with new movie hits as well. That didn't work out quite as planned. Hot Tub Time Machine, anyone?
Meanwhile, between downloading, Wal-Mart's discount prices and companies such as Netflix and Redbox undercutting rental prices, DVD revenues plummeted (14 per cent across the industry in the last year alone) and Blu-ray sales didn't reverse the slide.
In late 2008, MGM stopped paying interest on its debts. Last April, the 23rd James Bond movie was postponed indefinitely. Also abandoned was a David Cronenberg film, The Matarese Circle, based on a novel by The Bourne Identity author Robert Ludlum and starring Denzel Washington and Tom Cruise.
No doubt, MGM will be back in the business in 2011, and there will be, eventually, another Bond movie. The difference is the company will be owned by people who don't know about movies, and who were badly mauled by their previous investment.
The MGM screwball melodrama comes with a tepidly ironic punch line. The ring of film around Leo the Lion's head in the MGM logo is inscribed with the studio's motto, selected in 1924 by studio publicist Howard Dietz: " Ars gratia artis," it reads, or "Art for Art's Sake."
COMING NEXT WEEK
Wednesday (Nov. 10)
Morning Glory Rachel McAdams plays Becky, the ambitious producer of a struggling morning television show with bickering co-hosts (Harrison Ford and Diane Keaton). Roger Michell ( Notting Hill) directs from a script by The Devil Wears Prada's Aline Brosh McKenna. Can Becky save the show and find true love (with Patrick Wilson)? Stay tuned.
Friday (Nov. 12)
127 Hours The movie that answers the question: Would James Franco give his right arm for an Oscar nomination? Danny Boyle directs the real-life story of hiker Aron Ralston (Franco) who took drastic measures to free himself from a boulder that pinned his arm. Festival screenings have resulted in some fainting.
Unstoppable Fresh from The Taking of Pelham 123, director Tony Scott and star Denzel Washington apparently hadn't had enough fun playing with trains, so they made this runaway-engine caper, starring Washington as a veteran rail worker and Star Trek's Chris Pine as the rookie engineer who must combine courage and brains to save southern Pennsylvania from a fate worse than being southern Pennsylvania.
Down Terrace Shot in eight days, it stars real-life father and son Robert and Robin Hill as a pair of criminals who return from jail determined to figure out which of their friends snitched on them to the police. This British black comedy has been described as what The Sopranos might be like if directed by Mike Leigh.
Monsters Former special-effects man Gareth Edwards's debut feature has drawn comparisons to District 9. The ultra-low-budget science-fiction story is about a photographer who escorts his publisher's daughter through the "infected" zone in northern Mexico, where extraterrestrials have taken up residence.
Skyline Two alien-invasion movies in one week? There must be something in the ionosphere, or the Halloween weekend was too competitive. In this version, flying saucers land in Los Angeles and start making people disappear. The studio isn't allowing any advance screenings, which may mean a surprise twist, like the aliens are just trying to move the city off the fault line.