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David Poland

By David Poland poland@moviecitynews.com

MGM: No Thanks, All Giving

Good reporting of the facts of the discussions around MGM by Ron Grover.
The most interesting thing in there, really – since none of this is really a surprise at this point – is that Stephen Cooper is rumored to have said that all he could get for MGM was $1.5 billion. That about one-third of what it was valued at when it was last sold.
The idea that the Bond franchise worth anything close to that is idiotic on its face. It would take 20 years or more to generate profits close to that with the franchise. However, all the company’s ongoing franchise assets may be worth $750 million in real money. And the idea that the massive library is now being valued by potential buyers at less than a billion is a wake-up call for everyone in the industry.
That’s less than the DreamWorks library of under 59 films was financed at just 4 years ago… for a 4000 film library.
So much for the long tail.
At these prices… even at $2 billion or $2.5 billion… MGM is actually a bargain, but a company will have to have deep enough pockets to ride through all the distribution changes to come in the next decade.

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5 Responses to “MGM: No Thanks, All Giving”

  1. Aris P says:

    Not sure I understand the James Bond math — the last 2 Bond films grossed almost 1.2 billion. I know that a hefty chunk of that has to recoup all costs, but they were released what, 2-3 years apart? A couple more installments at those grosses and you’ve passed your 1.5 billion. Add in VOD, DVD, BD, (not to mention whatever else MGM has to offer), and it sounds like a good deal to me.

  2. Eric says:

    Maybe his numbers are factoring in the fallout from the last James Bond movie being a tiresome piece of crap?

  3. Foamy Squirrel says:

    Dave’s probably right about the numbers. Quantum of Solace grossed about $575million worldwide. Cut that in half right off the bat for the cinema/distributor cut giving $287mil (give or take a million or two). Production budget was $230mil, and we’ll assume that was all spent and includes the financing costs, DGA/WGA/SAG/AMPTP gross participation points and studio overheads.
    DVD sales were about $45mil (again, gross – you’ll have to take out the 30-40% retailer’s cut) and the Bond movies usually have good ancillary revenues. I couldn’t find marketing figures, but the MPAA estimates average costs to around $40mil – given this is a Bond film, we’d assume that figure was much higher. We’ll be generous and say they got a profit around $43mil.
    That gives a net profit of $100mil, or roughly 30% return on your $300mil investment (production + P&A). To look at it another way – how much would you pay to get a $100mil cheque in the mail every 2.5 years? $1.5billion? Didn’t think so.

  4. bmcintire says:

    This is the Bond FRANCHISE being discussed, not just future profits on yet-to-be-made features. The worldwide television and home entertainment revenue on these 21+ films has been enormous, and will continue to be so for a comfortably long time.

  5. Foamy Squirrel says:

    I think the operative words in your comment were “has been”. The future revenues from the past 21+ films pale in comparison to future installments. I’m sorry, but if you think Octopussy is going to pull in $2mil in profits every year I’m going to be highly dubious.

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