MGM Financial Peril May Affect Hobbit, Bond and RoboCop

By Kevin Coll • September 30, 2009 • 3 Comments

Deadline Hollywood Daily, is reporting that MGM recently held a conference call with its bondholders in a desperate plea for funding. I didn’t know MGM was in financial peril but then again I haven’t been reading a lot of the financial Hollywood news as of late. Turns out the studio is teetering on the edge of bankruptcy with over $3.5 billion in debt.  It was said that the studio missed its financial earnings and was in need of $20 million to cover overhead and an additional $150 million to continue developing The Hobbit and the new “untitled” 23rd James Bond film.

“So the bondhholders said to MGM, in essence, that they were going to let the studio go bankrupt and collect their money since they’d be first in line to get paid. But Cooper explained that this would be the worst possible outcome for the creditors and the company. Because if MGM were forced into bankruptcy, then it would lose James Bond and the studio doesn’t think it can stay alive without 007.”

“Also, a lot of other issues would surface that would tremendously hurt MGM. Also, if MGM goes through bankruptcy, that’s a very expensive prospect (where only the lawyers get rich), and extremely disruptive (since who would do business with MGM in the interim) and won’t get the creditors what they want which is their money back. It’s more than simply MGM losing Bond. The studio could lose a lot of other franchises.”

A lot of other franchises include The Hobbit and even Robocop, which is in reboot mode. MGM has done so well keeping Bond lucrative and with The Hobbit they had an opportunity to add another major one to their list not to mention the Robocop reboot seemed very promising. MGM has had their fair share of financial woes through out its storied history. That being said I hope that they can get their interest payments waived temporarily in order to get these projects up and running because like them I believe they can cover their debt with the financial hauls all 3 of these movies can make. i wonder how this will affect the Stargate franchise as it too is owned by MGM.

So what’s next? MGM now has to formally ask for the forbearance and the bondholders will formally respond. 51% of the vote matters for approval of that request. We will keep a close eye on this story as it develops because it could mean the end of MGM and Bond will be sold to another studio along with Hobbit and other properties.

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