The Mgm Lion Is...Well, Growling Againby
The fifth floor of an office building off the Santa Monica freeway is a long way from Hollywood's epicenter. Still, if you're Metro-Goldwyn-Mayer Inc., which has spent more time on the ropes than the star of its 1976 film Rocky, it's prudent to cut corners on your headquarters. Now, after repeatedly fending off bankruptcy, MGM finds itself in the rare position of having back-to-back hits. The studio sold $26 million worth of tickets to its 17th James Bond flick, Goldeneye, in mid-November, its biggest weekend ever. This heady opening on top of the success of the gangster comedy Get Shorty came none too soon for MGM and its struggling parent, Credit Lyonnais, the French bank.
Little wonder, then, that they're cheering back in Paris. Under U.S. banking laws restricting how long banks can hold nonbank companies, Credit Lyonnais has until May, 1997, to sell MGM, which runs the MGM and United Artists Pictures Inc. studios. A couple of hits should make a sale easier for the bank, which foreclosed on the studio in 1992 after Italian financier Giancarlo Parretti loaded it with more than $2 billion in debt. On November 21 the Credit Lyonnais unit that controls MGM hired Lazard Freres and Co. to help it unload the studio.
FINDING FRIENDS. Former Paramount Pictures Chairman Frank G. Mancuso, who has headed MGM since just after the foreclosure, has a lot riding on the outcome. Although his contract with the bank expires if the studio is sold, MGM sources say Mancuso is hoping to find a partner with whom to bid for control. Among companies said to be interested in MGM are Polygram, Bertelsmann, and Tele-Communications.
Despite recent gains, MGM remains a money-loser. Boosting production to as many as 20 films a year forced it to dig deeply into its $650 million in credit lines. Moreover, financier Kirk Kerkorian, who owned MGM in the 1970s and 1980s, sold Gone With The Wind, The Wizard of Oz, and much of the rest of MGM's library to Ted Turner. The studio still has rights to more than 1,500 films, but that barely covers overhead.
As a result, Mancuso had to cut corners to restart production. Early on, the studio dug through Hollywood's discard heap to find such films as last year's surprise hit, Stargate, produced by France's Canal Plus and passed on by other U.S. studios. It picked up Get Shorty when Sony Pictures Entertainment nixed it. And partners helped make other films, including Mulholland Falls, a drama starring Nick Nolte and Melanie Griffith scheduled for release this spring.
One area where MGM hasn't skimped is promotion. The studio spent heavily to advertise Species, a sci-fi flick released in July that grossed a surprising $50 million. And in September, in an unsuccessful effort to boost Showgirls, MGM shipped 250,000 eight-minute cassettes of excerpts from the sex-filled film to the adult sections of video stores.
WEAK BUZZ. But the studio put its biggest punch behind Goldeneye, anteing up an estimated $17 million to promote the Pierce Brosnan film with splashy TV and print spots and a 30-minute infomercial. "The idea is to get people to know that you're coming," says Mancuso. "Sometimes that takes being as creative with your marketing as with making the film."
For all of its maneuvering, MGM has just 5.4% ef Hollywood's total box office this year. And it has had its share of flops, including Tank Girl and Fluke. Plus, the buzz on some of its upcoming films, including the western Wild Bill, starring Jeff Bridges and Ellen Barkin, isn't good. "They've had a good run of late," says John Krier, president of Exhibitor Relations Co., which analyzes films for theater chains. "But they are sure not out of the woods yet."
For now, MGM plans to keep the films coming until next year, when foreign and video revenues from Get Shorty, among others, will help it show an operating profit for the first time since 1986. Upcoming offerings, including such high-profile flicks as Birds of a Feather, an adaptation of La Cage aux Folles starring Robin Williams, should help. Plus, the studio has signed John Travolta and Sharon Stone for The Lady Takes an Ace, a comedy from the creators of TV's Cheers. All that, plus a Goldeneye, may finally put the MGM lion front and center again.