Metro Goldwyn Mayer (MGM), one of Hollywood’s flagship companies, is apparently in trouble. The economic havoc wrought by the coronavirus, in addition to the double pressure of debt and not being able to release several of its major seasonal titles, has precipitated a decision that is baffling to much of the industry: the studio is about to be sold and with it, one of the most important historical assets of the seventh art.
A few months ago, Hollywood was hoping that the arrival on screen of what will be the 25th James Bond film, No Time to Die, directed by Cary Fukunaga, would manage to revive the business in theatres. It was not only a symbolic film, but also a franchise with enough muscle to attract audiences back to theaters.
After the disappointment of Christopher Nolan’s Tenet, it was hoped that the new release of a saga like James Bond could help to regain the affluence in movie theaters after the devastating effects of the pandemic.
A crisis that also threatens in 2021
After being shot, the premiere of No Time to Die began to suffer a series of postponements until finally the possibility of its presentation in 2020 was ruled out. Afterwards, there were considerable rumors that MGM was going to release the film for streaming, something that was never confirmed but proved that something strange was happening. In addition, several specialized financial firms calculated that for every month that a film of this size was delayed, almost $1 million was lost, plus interest associated with the entire projection and distribution structure of the film.
So, for the last month of this eventful 2020, MGM Holdings lost about $50 million due to its inability to release the Bond film. The debt is also expected to increase due to a series of penalties and contracts that are coming to an end, while the film remains in the archives. Unlike other studios that have various entertainment assets that allow them to recover profits to the extent possible, MGM is only due to its large screen releases.
The slow erosion of the studio’s finances, compounded by a considerable amount of debt, and the inability to ensure that No Time to Die will be released in the spring of 2021, led to the unthinkable. According to the Wall Street Journal, MGM has declared that it is putting the entire holding company up for sale for the sum of $5.5 billion.
James Bond, Rocky or The Hobbit
If we take into account that Metro Goldwyn Mayer is one of the pioneering studios of the cinema, the fact of its sale is a blow of considerable importance for the cinema. For now, the company has ties with Sony and a momentary partnership with Universal to ensure distribution of the latest Bond, but even the measures that are trying to alleviate the recession and loss of its assets do not seem to have avoided a complicated situation of red numbers. So the sale of the consortium (which includes cinema and television) is inevitable and shows that the industry is going through one of its worst historical moments.
It is worth remembering that MGM’s catalog is also one of the most robust in the market, in addition to the James Bond saga, it also includes Rocky, The Hobbit and more than 4,000 films and over 17,000 hours of television, which would make it an addition of considerable interest to any studio with an active streaming platform.
MGM’s situation is complicated enough to reflect what could be 2021. With no firm release dates for any studio and streaming becoming increasingly necessary, what happened with Metro Goldwyn Mayer could be repeated with several smaller studios. That would mean the disappearance of several of Hollywood’s biggest names in the next few years. Did the pandemic speed up the process or is this an inevitable situation? Whatever the answer, we can only wait for the full financial outcome of 2020 and especially for a thorough analysis of its medium-term consequences.