Spare a copper guv....? - The Barrow-Downs Discussion Forum

davem · 05-15-2009, 02:42 PM

Looks like poor old MGM may need to find a Dragon hoard ......

Quote:

May 14 (Bloomberg) -- Metro-Goldwyn-Mayer Inc., the movie studio controlled by Providence Equity Partners Inc. and TPG, is in talks with lenders to restructure $3.7 billion in debt....

The company, with the debt coming due in 2012, said it intends to stay independent. A specific restructuring plan hasn’t been determined, according to a person with the knowledge of the situation. Possibilities include extending the maturity of the existing debt or a debt-for-equity swap, said the person, who asked not to be identified because the talks are private.

The maker of “James Bond” movies also has been trying to raise money to finance new films, including pictures based on J.R.R. Tolkien’s “The Hobbit.” The studio is in compliance with its loan covenants and cash flow for the fiscal year ended March 31 was within budget projections, the company said. http://www.bloomberg.com/apps/news?p...d=aAkQCXqtlHvg

and as we all know from New Line's disastrous experience with the LotR movies there's simply no profit in Tolkien movies.......

Boo Radley · 05-16-2009, 12:34 PM

Quote:

Originally Posted by davem

and as we all know from New Line's disastrous experience with the LotR movies there's simply no profit in Tolkien movies.......

I know! Sad, innit?

davem · 05-16-2009, 03:12 PM

Maybe MGM will find that New Line's 'creative accounting' over the LotR movies comes back to bite them badly as regards getting new finance - claiming that they made no profit from the trilogy might have seemed a good idea at the time, as a way to avoid handing over anything to those who worked on the movie & in particular to the Tolkien Estate, but how many investors will want to put money into the Hobbit movies (particularly in the current economic climate) if they may risk the same thing? After all, the Hobbit movies could apparently gross billions of dollars but still not make any 'actual' profit....

Lush · 05-19-2009, 05:00 AM

Urrrrrrrrrrgh.

This is the reason why I tell 99.9% of people planning on starting a production company to learn how to crochet instead (unless they're going small, niche and creative). The crisis is bad enough, but Hollywood essentially runs on outdated business models. There's hardly any money for anything good, so you get stuck making straight-to-DVD schlock, while changing media is ensuring that the idea of "big stars" is becoming more and more obsolete - which in turn makes "big blockbusters" trickier to pull off.

It's not nearly as bad as the music business, which basically poured gasoline on itself and stuck a match as a result of greed (yeah, getting rid of singles CD and trying to force people to buy an entire bad album was really, really smart right as downloading gained momentum), but it's bad.

On one hand, you feel bad for the big studios facing these crises, if only because genuinely good films under their wings are going to get their budgets slashed or grind down altogether, on the other hand, enough is enough.

TheOrcWithNoName · 05-19-2009, 05:25 AM

Quote:

Originally Posted by davem

Looks like poor old MGM may need to find a Dragon hoard ......

and as we all know from New Line's disastrous experience with the LotR movies there's simply no profit in Tolkien movies.......

Could some kind soul elaborate on this one please? I rather naively assumed the LOTR movies had made NL a shedload of money. Or were the NL bean counters being a little creative with their final bottomline figures for the films, if only to get PJ off their back claiming that he wanted a bigger slice of the profits pie?

Moving forward, I rather think the financial crisis hitting Hollywood is both a good & bad thing. Yes it may mean some of the bigger studios either merging or going out of business altogether; but then it may mean the end of such ridiculous salary demands of some so-called "A" lists actors and their ageints with their $30m per film silliness.

Of course it will mean original screenplays will be few and far between as studios will only stick with what they know will be profitable. Much in the same way that some software houses that right computer games are more or less sticking to tedious FPS, sports franchises and not much else given the huge cost in developing & publishing a game.

I just hope The Hobbit film does get the green light, and that there's a little more honesty & transparency when it comes to watching where the profits end up

William Cloud Hicklin · 05-20-2009, 03:22 PM

Quote:

I rather naively assumed the LOTR movies had made NL a shedload of money. Or were the NL bean counters being a little creative with their final bottomline figures for the films, if only to get PJ off their back claiming that he wanted a bigger slice of the profits pie?

You got it! PJ had to sue and eventually settled for an undisclosed sum- but then the Tolkien Estate, which is owed 7% of the gross- gross, mind you- has sued New Line because they haven't received one red cent.

http://www.variety.com/article/VR111...goryid=13&cs=1

Kent2010 · 05-20-2009, 10:50 PM

William, I think the Tolkien Estate will get their proper dues, it's just the American legal system is tremendously slow. Plus there are several sales of rights to wade through. United Artists, Zaentz and others broke apart the rights and sold different parts to different places. One company has merchandise rights, MGM and NL were in a battle over who had The Hobbit film rights, supposedly NL has the 7.5% gross receipt clause that is owed to the Estate, but NL was trying to claim they only leasers, and Saul Zaentz should be responsible for the 7.5%. Which is ridiculous, and NL has shown this "creative accounting" before, with the actors and Jackson's lawsuits.

This was all a while ago, so I may have fallen behind, but the U.S. legal system is molasses, and now that NL is absorbed, the execs in charge are gone, who knows what the Tolkien Estate can do? It would be great if anyone had updated info about the lawsuit.

TheOrcWithNoName · 05-21-2009, 06:06 AM

Such creative accounting seems to be quite rife across big corporations, film studos and of course, financial institutions such as the odorous banks & loan companies.

I hope lessons will be learnt and that there will be laws demanding more clarity when it comes to cash flow, profits and who gets what.

...although I am not holding my breath!

davem · 05-21-2009, 11:38 AM

http://www.laweekly.com/2009-05-21/n...llywood-style/

Quote:

Now investment bankers Moelis & Co. have been hired to advise the studio on a potential restructuring and to explore options for optimizing its capital structure (i.e., talking to lenders about altering MGM’s long-term debt obligations). “You lower your interest payments, you free up cash to make more movies,” a source tells me. “With debt selling at a discount [50 cents on the dollar], every company is doing the same.”

I hope this new plan of attack can help. Because it’s vital to Hollywood that this buyer survive. Everyone knows that Mary Parent has been holding the studio together with the equivalent of chicken wire: specifically by partnering with studios left and right because they are willing to front the costs of each production. Things aren’t much better on the TV side. And if the auditors declare MGM technically insolvent, all hell breaks loose.

Honestly, I don't know if this could cause problems with the Hobbit movies - if MGM are unable to go ahead then doesn't Zaentz get the rights back?- & I would assume a bidding war among the studios follows - which may stop the current production altogether, & that throws out everybody's plans.

Mithalwen · 05-21-2009, 04:18 PM

Quote:

Originally Posted by TheOrcWithNoName

Such creative accounting seems to be quite rife across big corporations, film studos and of course, financial institutions such as the odorous banks & loan companies.

Bear in mind there is just the one accountancy joke:

What is 2+2?

What do YOU want it to be?

05-16-2009, 03:12 PM	#3
davem Illustrious Ulair Join Date: Aug 2002 Location: In the home of lost causes, and forsaken beliefs, and unpopular names,and impossible loyalties Posts: 4,240	Maybe MGM will find that New Line's 'creative accounting' over the LotR movies comes back to bite them badly as regards getting new finance - claiming that they made no profit from the trilogy might have seemed a good idea at the time, as a way to avoid handing over anything to those who worked on the movie & in particular to the Tolkien Estate, but how many investors will want to put money into the Hobbit movies (particularly in the current economic climate) if they may risk the same thing? After all, the Hobbit movies could apparently gross billions of dollars but still not make any 'actual' profit.... __________________ “Everything was an object. If you killed a dwarf you could use it as a weapon – it was no different to other large heavy objects."

05-19-2009, 05:00 AM	#4
Lush Fair and Cold Join Date: Dec 2001 Location: the big onion Posts: 1,770	Urrrrrrrrrrgh. This is the reason why I tell 99.9% of people planning on starting a production company to learn how to crochet instead (unless they're going small, niche and creative). The crisis is bad enough, but Hollywood essentially runs on outdated business models. There's hardly any money for anything good, so you get stuck making straight-to-DVD schlock, while changing media is ensuring that the idea of "big stars" is becoming more and more obsolete - which in turn makes "big blockbusters" trickier to pull off. It's not nearly as bad as the music business, which basically poured gasoline on itself and stuck a match as a result of greed (yeah, getting rid of singles CD and trying to force people to buy an entire bad album was really, really smart right as downloading gained momentum), but it's bad. On one hand, you feel bad for the big studios facing these crises, if only because genuinely good films under their wings are going to get their budgets slashed or grind down altogether, on the other hand, enough is enough. __________________ ~The beginning is the word and the end is silence. And in between are all the stories. This is one of mine~ Last edited by Lush; 05-19-2009 at 05:03 AM.

05-20-2009, 10:50 PM	#7
Kent2010 Wight Join Date: Mar 2009 Location: USA Posts: 240	William, I think the Tolkien Estate will get their proper dues, it's just the American legal system is tremendously slow. Plus there are several sales of rights to wade through. United Artists, Zaentz and others broke apart the rights and sold different parts to different places. One company has merchandise rights, MGM and NL were in a battle over who had The Hobbit film rights, supposedly NL has the 7.5% gross receipt clause that is owed to the Estate, but NL was trying to claim they only leasers, and Saul Zaentz should be responsible for the 7.5%. Which is ridiculous, and NL has shown this "creative accounting" before, with the actors and Jackson's lawsuits. This was all a while ago, so I may have fallen behind, but the U.S. legal system is molasses, and now that NL is absorbed, the execs in charge are gone, who knows what the Tolkien Estate can do? It would be great if anyone had updated info about the lawsuit. __________________ an eye for an eye leaves everyone blind

05-21-2009, 06:06 AM	#8
TheOrcWithNoName Animated Skeleton Join Date: May 2009 Location: Birmingham, central England Posts: 48	Such creative accounting seems to be quite rife across big corporations, film studos and of course, financial institutions such as the odorous banks & loan companies. I hope lessons will be learnt and that there will be laws demanding more clarity when it comes to cash flow, profits and who gets what. ...although I am not holding my breath! __________________ "No that's fame. Fame has a fifteen minute half-life, infamy lasts a little longer."