Can Lyonnais Make Mgm Roar Again?

Metro-Goldwyn-Mayer Inc.'s headquarters in Santa Monica, Calif., bears the unmistakable marks of faded glory. The 12 Oscar statuettes that adorn its lobby are from many years ago. And one of them is a fake, standing in for a statue that MGM's embattled former owner, Giancarlo Parretti, gave away to a friend in 1990. MGM probably won't expand this collection soon. After being sapped of cash and creativity for years, the once-proud studio is still hurting.

But MGM's owner, Credit Lyonnais, faced with a three-year legal deadline to sell it, is mounting a valiant effort to regain its lost greatness. Lyonnais Chairman Jean Peyrelevade is rubbing his hands at the advent of the multimedia revolution and watching as buyers pay fat prices for Paramount Pictures Corp. and other studios. "If we can organize a studio that produces good films," says Peyrelevade, "MGM will be worth a lot." He says investment bankers tell him it should fetch $2 billion or "maybe more."

HAPPY ENDING? Most film industry sources think that getting MGM to break even will be an epic struggle. The studio has lost $1 billion over the past three years. Since foreclosing on borrower Parretti and taking over MGM in 1991, the bank has also forgiven nearly $1 billion in debt and added a new $400 million line of credit. That means Credit Lyonnais has invested or committed $2.3 billion so far. The studio will need still more money this year to boost its annual output from 8 films to 20. Studio executives are negotiating with other banks for an additional $300 million in loans.

Complicating the studio's problems, Carolco Pictures Inc., which had been counted on to produce big-budget films for distribution by MGM, has also run into some financial trouble. And MGM's previous owners have sold off the rights to a chunk of its 2,000-film library.

The job of producing a happy ending for MGM has been dumped into the lap of Frank G. Mancuso, 61-year-old ex-chairman of Paramount. The film veteran has reassembled large pieces of his Paramount management team plus respected outsiders. Insiders are saying MGM's prospects could brighten this summer, when it releases Blown Away, a Tommy Lee Jones thriller, and Getting Even with Dad, a comedy starring Macaulay Culkin and Ted Danson. Blown Away is already booked into an impressive 1,800 theaters for its July 1 opening.

In fact, Peyrelevade argues that MGM's cash flow should turn positive next year. In five years, he says, the studio will have recovered all the rights of its film library, boosting the studio's value to a multimedia buyer. Peyrelevade is counting on MGM's new cast of executives to turn those hopes into reality and remove a huge burden from his troubled bank.

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