Metro-Goldwyn-Mayer studio ousts Sloan as CEO

[Mazer Rackham]

Struggling Hollywood studio Metro-Goldwyn-Mayer Inc. is turning to a turnaround expert who has helped businesses from energy to doughnuts to help it dig out from billions in debt.

The studio said Tuesday it hired Stephen Cooper, the former CEO of such ailing businesses as Krispy Kreme Doughnuts Inc. and Enron Corp., to join an "Office of the CEO," which replaces Chief Executive Harry Sloan.

Cooper, named vice chairman, joins Mary Parent, the chair of MGM's worldwide motion picture group, and Chief Financial Officer Bedi Singh in the CEO office and has as his main task "to lead MGM's efforts to evaluate alternatives to improve its balance sheet," the studio said.

Sloan will continue as chairman.

The announcement comes as the studio faces the payback of $3.7 billion in debt by 2012, and a $250 million revolving line of credit that matures in April.

The debt was amassed when the studio was taken private for nearly $5 billion in 2005 by a group led by Providence Equity Partners, Texas Pacific Group, Sony Corp. and Comcast Corp., DLJ Merchant Banking Partners and Quadrangle Group.

In May, MGM told its lenders it was in compliance with its debt agreements as of March 31, but that it had hired financial adviser Moelis & Co. to help it restructure.

The studio has made about $500 million a year in revenue from its library of 4,000 movies and TV shows including a range of James Bond classics, but declining DVD sales have cut that by about 5 percent this year.

It also abandoned talks last year to continue selling its movies to CBS Corp.'s Showtime pay TV channel and instead took a 28.6 percent stake in Epix, a fledgling pay channel to be launched in October with Lions Gate Entertainment Corp. and Viacom Inc.'s Paramount Pictures.

Epix has so far struck just one deal with a distributor, Verizon Communications Inc.'s FiOS network, which has 2.5 million customers.

The last movie MGM released in theaters was "Valkyrie," starring Tom Cruise, in December. It plans a handful of new releases in the coming months, including "Fame" next month and "The Cabin In The Woods" in February.

Sloan began his tenure at MGM in October 2005 and agreed last August to continue as CEO through October 2011, but was an apparent casualty of the collapse of the credit markets and an industrywide decline in home video revenue.

The studio has had a number of disappointments since its rebirth under private owners.

It brought in actor Cruise and producing partner Paula Wagner to head subsidiary United Artists, but their first movie, "Lions for Lambs," flopped and was estimated to have lost $30 million. Wagner has since left the label to pursue projects independently.

MGM is in deep trouble, struggling to keep from being bought out, 50/50 chance at this point

[FormerBondFan]

Does that mean more delays for Bond 23?

[carl stromberg]

Does that mean more delays for Bond 23?

Hopefully there will be a big delay and Craig will walk away from the role. Or is that being too bitter.

I don't know if it will be delayed.

[katied]

Apparently things are so bad at MGM that Bond could go elsewhere. Not that that would help things all that much

[FormerBondFan]

Is the bad economy the cause of this or something else?

[katied]

Is the bad economy the cause of this or something else?

Bad economy for the most part-though I have heard it said that even in a bad economy people will still spend $10 to see a movie.

[Mazer Rackham]

Is the bad economy the cause of this or something else?

Bad economy for the most part-though I have heard it said that even in a bad economy people will still spend $10 to see a movie.

Video Games were supposed to be immune too.

This does put the breaks to Bond 23. For how long depends on how nice the creditors are willing to be and what kind of hardball the other studios are willing to play to break up MGM.

[Captain Nash]

After the huge delay that LTK - GE was, I'm sure EON will not want to go down that path again. Even if this site doesn't support Craig, I'm hoping no-one wishes to see Bond off the screen for too long. Afterall we are all Bond fans non?
Maybe another studio will pick up the pieces. Calling Sony.

[katied]

This does put the breaks to Bond 23. For how long depends on how nice the creditors are willing to be and what kind of hardball the other studios are willing to play to break up MGM.

This could get very interesting. Rather badly timed, though.

[James]

After the huge delay that LTK - GE was, I'm sure EON will not want to go down that path again. Even if this site doesn't support Craig, I'm hoping no-one wishes to see Bond off the screen for too long. Afterall we are all Bond fans non?
Maybe another studio will pick up the pieces. Calling Sony.

To be honest, I'd rather the series took a break than get a couple more Daniel Craig films along the lines of CR/QoS. The whole James Bond thing is just not much fun anymore.

[katied]

To be honest, I'd rather the series took a break than get a couple more Daniel Craig films along the lines of CR/QoS. The whole James Bond thing is just not much fun anymore.

This.

if they take a break for a few years Daniel Craig may have to have some work done to keep him looking young!

[Mazer Rackham]

MGM Wins Temporary Reprieve on Debt Payments.
That is all it is, a Temporary reprieve. They can skip the interest payments for Sept,Oct,Nov, but the Dec 15th payment it sill on.
This probably gives them about $170 to work with, keeps them in the deal for the Hobbit, for now.

Not helping things is that MGM has a $250 m revolving loan that comes due in April.

Trust me, behind the scenes there are a lot starting to work against MGM with hopes of bolstering their own studios.

[katied]

They'll have to have a bake sale!