Things looked pretty bleak a week or so ago when lenders to Metro Goldywn Meyer seemed ready to plunge the studio into bankruptcy. Facing over 3 billion dollars in debt and struggling with a recent slate of films that just weren’t bringing in audiences, MGM seemed like a lost cause. Worse, had it gone under two of its biggest properties, The Hobbit and James Bond, would have gone with it (or at least to the highest bidder).
Fortunately, MGM has received a reprive for the time being. While not technically a “bailout,” the studio has reached an interim agreement with lenders to forgo investment payments until mid-December:
“MGM is pleased to announce that the Company has entered into a forbearance agreement with its lender group. The Company is appreciative of its lenders’ ongoing support. Under the terms of the agreement, MGM’s lender group has agreed not to enforce its rights or remedies arising as a result of the Company’s request to not currently pay interest due on September 30, October 31, and November 30, 2009. This agreement, which expires December 15, 2009, provides MGM with additional liquidity as discussions continue regarding the development of an optimal capital structure in support of the Company’s long-term business plan.”
This deal only buys some time but will afford MGM the opportunity to coordinate efforts to turn the company around. I say that with some skepticism considering the studio’s upcoming films: Cabin in the Woods, Hot Tub Time Machine, The Zookeeper, and the remake of Red Dawn.
The titles may not sound like blockbusters but at least Joss Whedon is behind Cabin and Adam Sandler is producing Zookeeper (and his films have a way of making money). As for Red Dawn, how do you do a quality remake of a film with a premise so deeply rooted in Cold War fear? Personally, I don’t think you can but I’ll reserve judgment as I really enjoyed the original.
I won’t argue that these films may perform well, but I think it’s in MGM’s best interest to get The Hobbit and next Bond film on deck as quickly as possible. Sure, they’ll cost a lot, but this is the eleventh hour and the studio needs bankable franchise material in theaters. If the downward spiral is not averted it will be interesting to see what happens to those two properties but there will be a more tragic moment: No longer hearing that familiar lion in theaters. Roar!