Chapter 595 The MGM Acquisition Case

The fact that New Universal is buying and leasing the copyrights of film and television works in Hollywood has already spread in the industry.

Movies from some small film companies are directly bought out!

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

Warner's movies are signed with a 20-year package contract, and the annual rental fee is 20 million US dollars. Recently, Kevin Turner is actively contacting Twentieth Century Fox, intending to lease the online streaming rights of his movies for 25 years at a price of US$12 million per year.

It can be seen from this that Tang En is very optimistic about the future of the Internet and dares to make a big investment.

We are all smart people.

Tang En didn't need to hide anymore, 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 is approaching saturation. To find new profit points, there are three main directions: telecom operation, mobile operation, and film and television entertainment.

Only then did Tang En understand the truth, and said in surprise, "You want to use the movie on-demand network to promote Comcast's telecom operation industry?"

Steve Burke said: "Channels can promote the sales of content, and content can also promote the expansion of channels. Universal International Distribution Company can quickly open up distribution channels all over the world, isn't it because of "Harry Potter" Forced push with Philosopher's Stone?"

Tang En smiled. At this time, Martin Scorsese had already left with the knowledge.

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

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

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

Steve Burke laughs: "Comcast has no interest in managing MGM, and of course, has no ability to manage it well. We just want the Internet on demand rights."

Tang En was very dissatisfied, "Steve, I'm in a hurry, it's better to be straightforward!"

Steve Burke whispered: "Sony Entertainment contacted Comcast, wanting to cooperate, lead the establishment of an MGM holding company, attract several Wall Street foundations, and leverage MGM!"

Tang En's complexion changed drastically after hearing this!

If this is the case, Sony will definitely raise an extremely high price from MGM!

In Hollywood today, MGM is generally valued at between US$3 billion and US$3.5 billion.

It certainly wasn't to Kirk Kerkorian's liking.

However, the current MGM market is worth the price.

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

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

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

Such an operation, of course, the price will not be too high.

But Sony is different.

Sony acquired MGM in order to obtain 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.

Their acquisition of MGM was not for MGM, a crippled film company, but for the promotion of online video-on-demand through MGM's film library, thereby driving Comcast's telecom operation business.

This kind of weird "goal" has nothing to do with the ideas of Time Warner, Disney, Viacom, and General Electric.

Naturally, they can offer a sky-high price that can satisfy Kirk Kerkorian's appetite!

In the previous life, Sony took the lead in acquiring MGM in the name of a holding company at a sky-high price of 4.8 billion US dollars!

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

But Sony is overwhelmed, can it come up with so much money?

Of course not.

In this transaction, Sony actually only spent 300 million U.S. dollars to get control of MGM.

The specific process: Sony invested 300 million US dollars, accounting for 20% of the shares; Comcast invested 300 million US dollars, accounting for 20% of the shares; Providence Equity Partners contributed 435 million US dollars, 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 US$1.5 billion in cash was borrowed from more than 20 Wall Street banks with future MGM assets as collateral.

With such a wave of operations, Sony spent the least amount of money to get the control of MGM, 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 entire United States, most of which are not Hollywood movies, such as B-grade movies with extremely low investment, adult movies, imported movies, TV movies, etc.)

This acquisition is amazing for Sony. They control nearly 50% of Hollywood film sources, providing the most favorable guarantee for the development of Blu-ray discs;

Comcast is great. They have cooperated with Sony to obtain a huge source of film, and provided assistance for telecom operations through the Internet on-demand business;

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

However, MGM was miserable as a company.

Counting the US$1.8 billion that was originally responsible and the US$1.5 billion in debt for leveraged buyouts, the total debt has reached US$3.3 billion!

With MGM's operating capacity and such a large debt pressure, how many years can it live?

Can you pay interest?

In fact, it is true. By 2009, MGM could no longer sustain it and declared bankruptcy.

Sony's $300 million was in vain, but Sony Pictures released two "007" movies, and it has already made money back, not to mention Blu-ray Disc, which completely defeated HD-DVD.

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

The worst thing is Wall Street. Their investments and loans have lost all their money!

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

It also messed up the investment environment in Hollywood.

Since then, Wall Street funds have shrunk rapidly, and Hollywood has seen many investors from the Middle East and Asia.

No matter from which point of view, Tang En did not want MGM to fall into Sony's hands again.

Although, he is not optimistic about the prospects of running MGM.

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

Steve Burke's words seemed to give Tang En a reassurance.

"Oh?" Tang En smiled, "Your request must be quite big, right?"

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

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

Of course, Tang En would not refuse a good thing delivered to his door.

The online on-demand service refers to the on-demand of a single movie, such as "Spiderman", the on-demand fee is 5.99 US dollars; "A Beautiful Mind", the on-demand fee is 2.99 US dollars; "Chain Saw", 1.99 US dollars.

The streaming media business refers to the monthly subscription model. For example, as long as you spend 10 dollars to open a membership, 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.

Dunn doesn't mind cooperating as long as Comcast pays.

In the previous life, the reason why Sony was able to take the lead in forming a huge international consortium to acquire MGM was largely due to the fact that it brought in its ally Comcast.

Comcast's development is great. It is an emerging upstart. It once wanted to buy Disney, which shows how rich it is.

If Dunn cooperates with Comcast, cut off the connection between Comcast and Sony.

So Sony, what qualifications can convince Wall Street?

Just because of Sony's terrible stock price?

Steve Burke said with a smile: "Back then, Sony's acquisition of Columbia Pictures had already shocked the entire United States. If we hadn't had to, we wouldn't want MGM to fall into Japanese hands again."

This is nonsense.

As a last resort?

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

How good is it to cooperate with New Global?

Long line, stable, less stressful.

Even if the online video-on-demand is taken away, it will be more, but it is better than spending hundreds of millions of dollars at once.

At the end of the day, Comcast is not bullish on the MGM acquisition.

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

He has the confidence!

He's even figured out that he's willing to pay upwards of $4 billion just to impress old bastard Kirk Kerkorian.

Whether it is Time Warner, General Electric, or Lionsgate, it is impossible to offer such a price.

He also doesn't want to prolong the negotiation front and drag it on for a year or two.

Sooner rather than later!

At this time, Nicole Kidman walked past him lightly, seeing that he was busy, she quickly winked her eyes and gesticulated: "I'm leaving first!"

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

"Twain? Dunn?"

"Huh? What's the matter?"

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

"Oh, thank you Mr. Roberts for your attention." Tang En expressed indifferently.

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

Tang En thought for a while, then pondered: "Well, I'll talk to the company later. 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 and looked happy.