MGM Ends Talks On Film Library
Beleaguered MGM (MGM) said Monday it reached an impasse in its efforts to buy the PolyGram Filmed Entertainment library from Seagram (VO).
"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