By now I think you've heard the big news about the Lion: They are looking into getting sold
. After a solid decade of Hollywood perks, Anchorage Capital manager Kevin Ulrich is looking to off-load MGM in the midst of a pandemic after a series of tumultuous valuation drops.
Among the potential acquirers were Facebook, Apple, Amazon, and Comcast. Among those, three are tech companies and one is a more traditional Hollywood media company.
There are some major hurdles to a potential deal, however. Danjaq, the IP holding company that owns Eon Productions and is run by Barbara Broccoli and Michael G. Wilson, owns merchandising rights and shares greenlight authority for all Bond movies. Distribution rights for movies like Creed
and Casino Royale
are divvied up between different companies. Reality TV assets, which were brought in to bolster their holdings, include Big Fish Entertainment, which among other things produces the now-cancelled Live PD. Debt hides in the balance books; any purchase would include about $2b, making the purchase that much harder to stomach.
For fun though, let's take a look at each of these four buyers to see how it could play into their strategies. Apple:
The much ballyhooed content lack for Apple might've motivated a deal back in the day, especially in 2019; indeed, the article notes that a deal with Apple that would've valued MGM at $6b was almost reached in 2018.
In 2018, Mr. Ulrich, by then the board chairman, and others on the board fired Mr. Barber for having early, unsanctioned conversations with Apple to sell the studio for more than $6 billion. The preliminary talks fell apart when he was ousted. Minority shareholders protested, with Owl Creek founder Jeffrey Altman sending a letter to the board saying Owl Creek and other shareholders wanted a deal.
From an accounting perspective, there are some serious perks to buy MGM. Say you spend 8b to get The Lion plus debt; assuming 4,000 movies and 50 100+ hour TV shows, that means you got 13,000 hours for about $600k per hour, pretty cheap all things considered and a fraction of what it would have cost to get the equivalent amount of content at Apple TV+ production prices (seriously where does that money go I don't see it on screen). Plus you get a full-fledged studio with Emmy credentials on the TV side and blockbuster franchises on the feature side; Fargo
and Handmaid's Tale
Now here's the question: will Apple actually
buy MGM? Their biggest M&A to date was the acquisition of Beats for $4b, and that came with technology that they could use for Apple Music.
This $6b offer came in 2018, before Apple had an in-house studio and any library to speak of. So far, they've been weathering the pandemic surprisingly well; they've managed to keep a steady drip of content between stuff like Ted Lasso and Tehran, while also building up their own in-house production arm (presumably at significant expense).
What this gets Apple now is a still not-insignificant franchise portfolio as well as a library of 4,000-ish movies plus TV shows. That's nothing to sneeze at, but it's still a far cry from the benefits that would've come from acquiring MGM earlier. If your only goal is library, then you don't spend $6b on it. Indeed, I don't think Apple will. Whether Ulrich will be willing to accept a deal for, say, $4b is an open question. My bet would be no. Amazon:
Same deal for Apple, though slightly less urgency because they already have a homegrown studio. Facebook
: Now this is interesting. Facebook exited the scripted content business pretty recently but there is a cognizance that content keeps users coming back to platforms and they need that content. Buying MGM would get them a fairly significant unscripted division with producing roles or control over valuable formats; among other things, they would own Botched!
and have producing roles in several Real Housewives
, and Shark Tank.
That having been said, I see any deal that involves the House of Zuck to involve a private equity company like Vine Investments or something that will take command of the library and other such assets - that way, Facebook isn't overpaying for one component. Comcast:
And the more traditional content company. There are interesting synergies that come with ownership by Comcast, but also big stumbling blocks. Their justification for buying Dreamworks was turning a low-margin business like movies into high-margin businesses like consumer products and theme parks. Similar thinking wouldn't be applicable to MGM, at least with regards to Bond; as mentioned before, Danjaq controls Bond's merchandising rights, and Comcast is pulling back investment in Theme Parks hard in the wake of the pandemic (many, many people got fired recently, unfortunately).
Still, control of Bond is important when Comcast is the owner of Sky, a European media company. That alone may end up making a lower-valued deal for MGM "worth it" for the cabler. A sale of MGM might also spur Danjaq to sell the rest of their rights to the property, though I wouldn't hold my breath. An Mi-6 land in Comcast's planned "Epic Universe" Theme Park in Orlando could make a great replacement for the now problematic Fantastic Beasts/Ministry of Magic land that was planned before.
Additionally, weetening the deal for Comcast are a myriad other smaller-scale IPs and franchises that could help beef up their portfolio and generate lucrative TV or movie revivals; among them are Stargate: Atlantis
, Teen Wolf, Rocky, Robocop, Chitty Chitty Bang Bang, The Addams Family, Jump Street, Pink Panther, Legally Blonde, Carrie, Bill & Ted,
Rights to adapt the musicals to film would also be taken; Dirty Rotten Scoundrel
and Legally Blonde: The Musical
are tantalizing possibilities.
Tolkien properties like The Hobbit
are presumably still tied up in rights tangles with New Line and the Saul Zaentz company, as well as Tolkien's estate. So far as I can tell, Zaentz owns merchandise, New Line has license for the film rights - but not necessarily/fully TV? - and the Tolkien estate own Theme Parks. Look, if MGM had sole rights, it'd be a Disney subsidiary by now.
In terms of TV: Epix, I assume, would be on the chopping block. Steve Stark's MGM/UA Television appears built to be a prestige-outlet (Fargo, Perpetual Grace LTD, Vikings, Handmaid's Tale
, though they're programming more sci-fi and general interest stuff like Clarice
and can thus complement the more genre/thriller-y UCP. By the same token, Orion TV would get retired. The dedicated formats division could be a component of Universal Alternative; Evolution Media, producer of Botched
, can be kept as a separate division. Other assets, like Christian Film and TV producer Lightworkers, Live PD
producer Big Fish, Mexican Media joint-venture Gato Grande, and Linear Channel Impact, can be sold.
MGM Films could go either way, De Luca has a relaxed relationship with Donna Langley so I could see her protecting him for a while. The best case scenario for him IMO is a FOX 2000 type situation where the team is dedicated to producing a small slate of good, lower-mid budget movies that are intended for Oscar season. Trouble is, Fox 2000 had like, 16 employees including assistants, and MGM is a full-on studio, so the overhead's gonna be a lot higher. Distribution and Marketing would also presumably gonna get pink-slipped, unfortunately; unlike Disney, Universal has ample infrastructure for distributing those sorts of movies. Not helping him would be if any of MGM's movies bomb. Overall, I think MGM has a strong enough brand to where it'll survive as Universal's New Line Cinema, a smaller-scale division with occasionally unclear branding (ironically, De Luca was NLC's President of Production). I am, however, left wondering if execs like Pam Abdy would tolerate being in charge of a glorified boutique when they signed on to be part of a studio.
Orion Pictures is in an awkward place in the case of a Uni merger. Their historical brand is as a genre outfit and said brand was revived in recent years with releases like the 2019 Child's Play and The Prodigy. However, they've recently pivoted to making it an outlet for underrepresented voices... but haven't had the chance to actually make that pivot public with some theatrical releases (or even projects). That leaves Langley and co with a choice regarding what to do Orion: keep it as a genre label, keep it as a minority-focused label, or retire it completely.
Now the plus side is that the overhead is likely to be small; the downside is that unlike say, Sony, Uni has little patience for prodigious numbers of labels (hence how short-lived experiments like reviving Gramercy as a label were, and stuff like selling off Rogue Pictures), so that bodes ill for the continued survival of Orion. Uni also already programs tons of minority-focused movies in general, so it's unclear if the brand would stand out in the broader company. On the flipside of that, Universal's large number of minority-focused Overalls (Will Packer, Jordan Peele, Malcolm Lee, Eva Longoria, SpringHill, Justin Lin) could help feed Orion's pipeline; I would imagine people like Michael B. Jordan, Taika Waititi and The Rock being wooed over to a producer deal with Universal by the presence of a dedicated minority-voice division designed to put out passion projects related to their heritage. The real test of whether or not Uni would want to nurture Orion as that kind of brand would be if they put out the next Jordan Peele movie through them.
Overall, it might be worth it to keep Orion around and see where it goes. If it doesn't work out, they can always just promote Alana Mayo as an EVP in Universal proper and retire the label completely. If Universal really
wanted a genre label that badly, I would suggest taking a minority-stake in Blumhouse first.
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