"Obviously we still like the asset," said MGM spokesman Craig Parsons, but the talks broke down...They didn't like our offer and we didn't like theirs."The 1,500-title library includes hit films such as The Graduate, Four Weddings and a Funeral and When Harry Met Sally. Some published reports had put MGM's bid for the property at about $350 million.
The PFE library was expected to be a much-needed boost to MGM's cash flow. As holder of the rights to those films, MGM could've sold television rights packages to local stations and cable outlets, re-issued them on video, or anything else it wanted to do with them.
Analysts have noted that many the weakness of the theatrical film division - a unit that has released bombs like Dirty Work and Species II within the last year - is partly due to a lack of cash. Credit Lyonnais analyst Richard Read recently told CBS.MarketWatch.com MGM simply doesn't have the money to buy top-flight scripts and A-list talent.
Parsons suggested the talks could resume at some point.
Meanwhile, the studio set Oct. 23 as the new record date for its proposed $500 million rights offering. Two months ago, MGM's board approved an increase in the rights offering to $500 million from $250 million in an attempt to bring in more cash. MGM shares rose 1/4 to 8 15/16.
In other media news:
- Influential Bear Stearns analyst Raymond Katz reiterated his "attractive" rating on shares of Viacom (VIA.B) Monday. In a research note, Katz said third-quarter EBITDA (earnings before interest, taxes, depreciation and amortization) will probably jump about 24 percent compared to year-earlier levels, boosted by "solid performance in all three of Viacom's operating units."
- Gannett posted third-quarter earnings Monday morning that were in line with Wall Street expectations. The publisher, best known for USA Today, The Detroit News and 7other daily newspapers, said in a statement that net income came to $176.5 million, or 62 cents a share, compared to $152.5 million or 53 cents in the year-earlier period. The 62-cent figure matched the average estimate of analysts surveyed by First Call. Gannett (GCI) shares rose 7/16 to 23 7/8 in recent trading.
- Shares of Viacom (VIA.B) rose 1 1/8 to 58 3/8 after Antz, a Dreamworks film released through Viacom's Paramount unit, topped the U.S. box office for the second week in a row. The digitally-animated film took in $15.4 million, beating Time Warner's (TWX) Rush Hour, which grossed $11.2 million.
- Newspaper publisher and television company E.W. Scripps (SSP) reported third-quarter earnings Friday that trailed Wall Street estimates. Scripps said net income amounted to $26 million, or 32 cents a share, compared with $38.5 million, or 47 cents, in the year-earlier period. Analysts surveyed by First Call were looking for a figure of 33 cents.
Written By David B. Wilkerson