MGM: For your eyes only

November 25, 2009

bond2MGM has sent out confidentiality agreements to 20 parties, as the venerable Hollywood studio test the market for a possible sale. But bankers don’t think there will be more than a handful of interested parties who actually put in bids. The most serious bidders for the studio — which dates back to the 1920′s and owns the James Bond franchise — would likely be media companies that already operate studios and want to acquire MGM’s rich content library, like Time Warner, which owns the Warner Bros studio, Lions Gate or News Corp, which owns the 20th Century Fox studio.

People have been expecting greater consolidation among studios for some time now, as movie studios struggle to combat falling DVD sales and figure how how to make money off consumers watching their entertainment online or on mobile devices.

Apart from cutting costs on film production and financing, studios could potentially get greater pricing control over their content if they team up, goes the thinking. And it’s not just studios that want to own content. U.S. cable operator Comcast is hoping to get access to cable programming and a movie library through its proposed acquisition of NBC Universal.

Still, the value of the company’s movie library — thought by many to be its crown jewel — is up in the air. With movies on demand and digital downloading taking a bite out of DVD sales, it will be interesting to see how much MGM can pull in for that asset.

(Reporting by Anupreeta Das and Michael Erman)

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