Chapter 595： MGM Acquisition

The news that New Universal has acquired and leased the copyright of film and television works everywhere in Hollywood has spread in the industry.

Some small film companies' films are directly bought out!

The big studios, like Warner Bros., sign a long-term lease.

Warner's films are signed on a 20-year package, with an annual rental fee of $20 million. Recently, Kevin Turner is actively contacting 20th Century Fox, intending to lease the network streaming rights of his movies for 25 years at a price of $12 million per year.

It can be seen that Tang En is very optimistic about the future of the Internet and dares to invest heavily.

All are smart people.

Tang En didn't need to cover up, and said lightly: "Why, Mr. Burke is also optimistic about the movie market on the Internet?"

"You can call me Steve." Steve Burke replied with a smile, and then said, "Not only that, in fact ... Comcast intends to expand the telecom operation market."

Comcast's TV operation market has approached saturation. To find new profit points, there are three main directions: telecommunications operations, mobile operations, and film and television entertainment.

Only then did Dunn figure out the truth, and said in surprise: "Do you want to use the Internet on-demand movies to promote Comcast's telecommunications operation industry?"

Steve Burke said: "The channel can promote the sales of content, and the content can also promote the expansion of the channel. Universal International Publishing Company can quickly open up distribution channels around the world, not just by relying on "Harry Potter" Forced advancement with the Philosopher's Stone?"

Dunn smiled, at this time, Martin Scorsese had left with interest.

The two came to a corner, and Dunn said with a half-smile: "It seems that Comcast is determined to win against MGM?"

"MGM has a coveted film library, and the whole of Hollywood, isn't it bidding for MGM?" Steve Burke said.

Dunn nodded, "Tell me, how does Comcast want to cooperate?"

Steve Burke laughed: "Comcast has no interest in managing MGM, and certainly doesn't have the ability to manage it well. We just want the web-on-demand rights."

Dunn was very dissatisfied, "Steve, I'm still in a hurry, it's better to be more direct!"

Steve Burke whispered: "Sony Entertainment contacted Comcast and wanted to cooperate, lead the establishment of a MGM holding company, pull in several Wall Street foundations, and leveraged to buy MGM!"

When Tang En heard this, his complexion changed greatly!

If that's the case, Sony will definitely charge MGM an exorbitant price!

Now in Hollywood, MGM is generally valued at between $3 billion and $3.5 billion.

This certainly did not satisfy Kirk Kerkorian's appetite.

However, MGM's current market is also worth this price.

Warner Bros. and Paramount want to acquire MGM, not to bring MGM back to life after the acquisition, but to shut down MGM directly!

In their view, MGM is hopeless, and there is no need to continue operating.

Close all departments, fire all employees, sell heavy assets, and just leave a huge film library.

Of course, such an operation will not be too expensive.

But Sony is different.

Sony bought MGM in order to get a huge movie library to promote Sony's Blu-ray disc!

This is not a trivial matter in the film industry, but is related to the macro strategy of Sony Group!

The same goes for Comcast.

They bought MGM, not for the crippled film company, but to promote online video-on-demand through the MGM film library, thereby driving Comcast's telecom operation business.

This kind of bizarre "target" is completely inconsistent with the concepts of Time Warner, Disney, Viacom, and General Electric.

Naturally they could charge a sky-high price to satisfy Kirk Kerkorian's appetite!

In the past life, Sony took the lead in the acquisition of MGM in the name of the holding company at a price of 4.8 billion US dollars!

Of that, $3 billion is in cash and $1.8 billion is in MGM debt.

But Sony can't take care of itself, can it come up with so much money?

Of course not.

In this deal, Sony actually spent only $300 million to get control of MGM.

The specific process: Sony invested $300 million, accounting for 20% of the shares; Comcast invested $300 million, accounting for 20% of the shares; Providence Equity Partners invested $435 million, accounting for 29% of the shares; Texas Pacific Capital Fund invested US$315 million, accounting for 21% of the shares; dlj Commodity Bank Partnership invested US$105 million, accounting for 7% of the shares; Sifang Group invested US$45 million, accounting for 3% of the shares.

The remaining $1.5 billion in cash was borrowed from more than 20 Wall Street banks against future MGM assets.

With such a wave of operations, Sony took control of MGM at the least cost, allowing Sony to control more than 7,600 movies!

You know, the total stock of movies in Hollywood is only 16,000. (There are hundreds of thousands of movies in the United States, most of which are not Hollywood movies, such as very low-investment B-movies, adult movies, imported movies, TV movies, etc.)

This acquisition, Sony is beautiful, they control nearly 50% of Hollywood's film sources, providing the most favorable guarantee for the development of Blu-ray discs;

Comcast is beautiful. They cooperated with Sony and obtained a great source of film. Through the Internet-on-demand service, they provided help for telecommunications operations;

Kirk Kerkorian is also beautiful, he sold MGM for a good price and made a big profit!

However, the MGM company is miserable.

Counting the $1.8 billion originally in charge and the $1.5 billion in debt for leveraged buyouts, the total debt has reached $3.3 billion!

With MGM's operating ability, how many years can you live under such a large debt pressure?

Can I pay interest?

In fact, it did. By 2009, MGM could no longer support it and declared bankruptcy.

Sony's 300 million US dollars was lost, but Sony Pictures released two "007" movies and made money back long ago, not to mention Blu-ray discs, which completely defeated hd-dvd.

Comcast's $300 million was also lost, but it also made up for it through video-on-demand and the telecom operation industry.

The worst is Wall Street, their investments and loans are lost!

This kind of leveraged buyout in the form of a holding company is very tricky.

It also messed up the investment environment in Hollywood.

Since then, funds on Wall Street have shrunk rapidly, and many investors from the Middle East and Asia have appeared in Hollywood.

No matter from which point of view, Dunn does not want MGM to fall into the hands of Sony again.

Although, he is not optimistic about the prospect of operating MGM.

"Comcast is more inclined to work with New Universal."

Steve Burke's words seemed to give Dunn a reassurance.

"Oh?" Tang En smiled, "Your request must not be small, right?"

Steve Burke said: "It's actually very simple. As I said, Comcast needs content to develop the online on-demand business and promote the telecom operation industry."

"As long as the on-demand revenue share is reasonable, there is no problem!"

Of course, Dunn will not refuse the good things that are delivered to the door.

The online video-on-demand service refers to the video-on-demand of a single movie, such as "Spider-Man", which costs $5.99 on-demand; "A Beautiful Mind", which costs $2.99 ​​on-demand; and "Chainsaw", which costs $1.99.

Streaming media business refers to the monthly membership model. For example, as long as you open a membership for $10, you can watch movies such as "Spider-Man" and "A Beautiful Mind" for free.

The general direction of the future must be streaming media.

But there is no contradiction between the two, and the competitive relationship is very weak.

As long as Comcast gives money, Dunn doesn't mind cooperation.

In the past life, the reason why Sony was able to take the lead in forming a huge international consortium to acquire MGM was largely because it brought in Comcast as an ally.

Comcast's development is too good. It is an emerging upstart. At one time, it wanted to buy Disney, which shows how rich it is.

If Dunn and Comcast cooperate, cut the connection between Comcast and Sony.

So Sony, who else can convince Wall Street?

Just because of Sony's terrible share price?

Steve Burke said with a smile: "Back then, Sony's acquisition of Columbia Pictures shocked the United States. If it is not forced, we don't want MGM to fall into the hands of Japan/I again."

This is nonsense.

As a last resort?

The truth should be that unless they have to, they are not willing to cooperate with Sony and invest in the hot potato of MGM.

How good is it to work with New Universal?

Long line, stable low pressure.

Even if the online video-on-demand is siphoned off a little more, it is still better than spending hundreds of millions of dollars at one time.

Ultimately, Comcast is not optimistic about the MGM acquisition.

Tang En said lightly: "Don't worry, as long as Comcast doesn't help Zhou, MGM will definitely belong to New Universal!"

He has the guts!

He even thought about it, in order to impress the old **** Kirk Kerkorian, he was willing to offer more than 4 billion US dollars.

Neither Time Warner, General Electric, nor Lionsgate would be able to offer such a price.

He also does not want to stretch the negotiating front for a year or two.

Sooner rather than later!

At this time, Nicole Kidman lightly walked past him, and seeing that he was busy, she quickly squeezed her eyes and gestured with her mouth: "I'll go first!"

Tang En's eyes lit up, his heart became hot, and he waved to her.

"Don? Dunn?"

"Huh? What's wrong?"

Steve Burke smiled, "In the past few years, Comcast's strategic direction has been a bit wrong, focusing too much on Viacom. But now Mr. Chairman has seen the situation clearly, and communicated with Viacom. In contrast, New Universal represents the future of film and television entertainment."

"Oh, thank you Mr. Roberts for your attention." Dunn's expression was indifferent.

Steve Burke said: "Actually, New Universal and Comcast have a great foundation for cooperation, such as the sta TV network, such as the acquisition of MGM, right?"

Tang En thought for a while, and said in a deep voice, "Well, I'll say something inside the company when I look back. The operation of the sta TV network can continue to be handed over to Comcast in the future. Of course, it can no longer be an exclusive operation."

"It's natural!"

Steve Burke breathed a sigh of relief, his face lightened.

(Sanqi Chinese)