Sony group locks up MGM acquisition

A group of companies led by Sony Corp. of America put a lock on its acquisition of film studio Metro-Goldwyn-Mayer Inc. for about $2.85 billion plus debt, giving it MGM's film library to exploit in DVD and newer digital media markets.

MGM, a venerable film and television studio that was once the most powerful outfit in Hollywood, will continue to operate as a private company based in Los Angeles, but details structure, leadership, and any job cuts were not disclosed.

Spokespersons for Sony and MGM declined to comment beyond the news release Thursday.

The Sony consortium includes U.S. No. 1 cable television operator Comcast Corp., Providence Equity Partners, Texas Pacific Group and DLJ Merchant Banking Partners, and each member shares will own shares in the newly private MGM.

The group is paying the same amount as announced earlier this month when an agreement in principle was reached. Thursday's "definitive agreement" is priced at $12 a share for MGM stock, plus assumption of roughly $2 billion in debt.

The group has committed $1.6 billion in equity financing. Providence Equity is putting up $525 million, Texas Pacific $350 million, Sony and Comcast $300 million each and DLJ Merchant Banking $125 million.

Sony Pictures Entertainment, the entertainment wing of electronics maker Sony Corp., will co-finance and make movies with MGM and distribute its existing film and TV shows.

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MGM and sister company United Artists, which makes films for the independent and art-house movie circuit, already have films slated for release in 2005 including big-budget films like a new "Pink Panther" movie starring Steve Martin.

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MGM-produced TV shows include "Stargate SG-1" on the Sci-Fi cable TV channel and "Dead Like Me" on Showtime.

The Sony group will look to exploit MGM's library of some 4,100 movies and 10,000 TV shows by selling DVDs of old titles. It will also look to mine that library for remakes and sequels to old films that include the "Rocky" movies.

Comcast, Sony Pictures and the equity partners have further agreed to a programming deal that will allow Comcast to use the MGM movies and TV shows in new digital video-on-demand services throughout its cable TV systems. They also are considering creating a new joint venture to form cable TV channels.

JP Morgan Chase will lead a bank syndicate to provide up to $4.25 billion in senior debt financing together with Credit Suisse First Boston.