Roar of MGM's lion becomes a purr

By James Melik
Business reporter, BBC World Service

The lion's roar featured at the start of MGM films since 1924 could soon be reduced to a purr, or even possibly silenced.

MGM is home to some of the most famous franchises in cinema history, including James Bond and the Pink Panther. But staggering under the weight of almost $4bn of debt, the studio is now looking for a buyer.

Carl DiOrio at the Hollywood Reporter magazine in Los Angeles says it is hard these days for a business to survive if it only makes films.

"MGM has never been the wholly integrated company such as Viacom or News Corp, or to some extent even Time Warner," he explains.

He says studios need deep pockets to fund pricey film productions - and they also need the natural synergies which come with multiple distribution platforms.

"MGM have been more narrowly focused on film and once DVD went into decline, that $4bn debt load was merely a time-bomb waiting to go off," he adds.

Slow decline

Metro-Goldwyn-Mayer was the dominant motion picture studio in Hollywood from the end of the silent film era until the 1950s.

From the outset, MGM tapped into the audience's desire for glamour and the company created a stable of stars, including legends such as Greta Garbo, Joan Crawford, Jean Harlow and Clark Gable.

Like its rivals, MGM produced 50 films a year, including seminal titles such as The Wizard of Oz, Northwest Passage and Gone With the Wind.

After 1940, production was cut to a more realistic 25 films a year. During that period, MGM came up with a successful run of musicals featuring the likes of Judy Garland, Fred Astaire and Frank Sinatra.

The studio continued to produce expensive musicals, but after the war, audiences were drifting away and television was becoming the dominant form of family entertainment.

The company's biggest cartoon stars were the cat-and-mouse duo Tom and Jerry.

Cutting loose artists such as Judy Garland, the studio managed to keep running, although its prestige had diminished by the 1950s.

However, despite occasional films continuing to perform well at the box office, MGM responded slowly to the changes in the industry and by the 1960s, it was losing significant amounts of money.

Uncertain future

There was a history of conflict in MGM's boardroom, even at the peak of its success, and the company has changed hands innumerable times over the past two decades.

Whether the studio can avoid bankruptcy has been the topic of much speculation in the industry.

MGM is currently owned by a consortium of Providence Equity Partners, Texas Pacific Group, the Sony Corporation, Comcast, DLJ Merchant Banking Partners and the Quadrangle Group.

With the riskiness of modern film industry, it is hard to imagine who would want to buy MGM now.

The Hollywood Reporter's Carl DiOrio believes someone might see fit to keep the roaring lion as a film label of some sort, but as an entity standing on its own two feet, he does not think that is feasible.

"The existing company cannot just be restructured, the debt load has got too severe and the cash flow has fallen off too severely," he says.

Creditors have recently extended the company's debt payments until the end of January 2010, but the 85-year-old lion is getting a little long in the tooth.

Its roar might be missed by an older, more nostalgic generation, but sentiment alone is not enough to keep a studio afloat in an age when people are increasingly turning to their laptops to watch films.

That is probably what prompted YouTube, the largest video-sharing website, to show full-length films from MGM's archives.

The partnership is aimed at boosting advertising revenue for both YouTube and the Hollywood studio.

MGM Trivia

The official motto: Ars Gratia Artis is Latin for Art for Art's sake

The studio's informal motto: More stars than there are in heaven

Released the first Technicolor feature with sound in 1928

Ben Hur released in 1959 won 11 Academy Awards, a total not matched until Titanic in 1997

Time Warner owns the rights to MGM's pre-1986 film library

Nevada millionaire Kirk Kerkorian owned MGM on several separate occasions

Other owners have included Italian financier Giancarlo Parretti and French bank Credit Lyonnais