Merrill Lynch & Co. has had trouble with its investments in Hollywood, recently disbanding its film-financing unit because of poor returns generated from
deals with Summit Entertainment, Paramount Pictures and others. Fearing more losses, Merrill is scrutinizing its financing deal with United Artists because of its recent firing of Paula Wagner as CEO, The New York Post reports.
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Merrill has a $500 million credit facility with UA. Rival investment bank Goldman Sachs has entered in the picture as a strategic adviser to UA's parent, MetroGoldwyn Mayer, to raise money for films and look into a possible sale, Business Week reported last week.
Goldman Sachs values MGM at $5.2 billion in a sale, but industry insiders believe that would be difficult to garner in this economic enviornment. Current reports say that MGM owners won't sell for substantially less than the $5 billion they paid for
the studio just a few years ago.
MGM did receive a bid for a minority stake from Reliance Big
Entertainment -- which recently signed a $550 equity investment in
a Steven Spielberg-resurrected DreamWorks -- according to the Hollywood Reporter. Meanwhile, Kirk Kerkorian reportedly offered a low-ball bid of $3 billion for MGM that was rebuffed. - Gerald Magpily
See The New York Post article
See The Hollywood Reporter article
