The recent economic downturn has had a ripple effect across the economy and now it’s threatening two of our favorite film prospects: The Hobbit and James Bond. In a conference call to bondholders studio Metro Goldywn Meyer sought funding to shore up the rest of the year and get projects on track. As money dwindles from MGM, management made a desperate plea to creditors:
“…with a request, or forebearance, to waive interest payments on MGM’s $3.5 billion killer debt until February 2010. Because if MGM doesn’t have to make those interest payments, then the studio can afford to use that money instead to fund the production slate.”
Just how bad is MGM at the moment? It needs, “$20M in short-term cash flow to cover overhead, and an additional $150 million to get through the end of year and continue funding its projects, and to start Peter Jackson’s The Hobbit.” Bondholders did not take the news well at all. In fact, reports indicate that they would sooner let the studio go bankrupt as they would be the first creditors to get paid back as assets were liquidated.
This of course would put The Hobbit and the 23rd James Bond film in jeopardy. Moreover, MGM would lose the rights to an future James Bond films entirely. As tragic as this is for MGM it’s not the first sign of studios having difficulty acquring financial backing in North America. Steven Spielberg secured funding for Dreamworks in August to continue making movies from one of India’s richest men:
“The deal with Anil Ambani, chairman of India’s Reliance BIG Entertainment, provides Spielberg’s DreamWorks Studios with $875 million, coming from Ambani, the Walt Disney Co. and loans made by a syndicate of banks.”