MGM Attracts Half a Dozen Suitors as Bidding Ends

What appears to be the final round of bidding for the Metro-Goldwyn-Mayer studio wound to a close Monday, with half a dozen finalists submitting offers, but none likely to pay the hoped-for price of $1.5 billion or more.

There were no real surprises in the names of bidders, as disclosed by sources.

They included Rupert Murdoch’s News Corp.; producer Arnon Milchan’s New Regency; producer James G. Robinson’s Morgan Creek; the current MGM management led by Chairman Frank Mancuso; European entertainment concern PolyGram; and a group that includes former Drexel Burnham Lambert executive Peter Ackerman using the name of Capella Films.

The bidding, believed to have attracted offers no higher than $1.2 billion, brings into the final stages the four-year odyssey of the studio, which was seized by Credit Lyonnais in 1992 from Italian financier Giancarlo Parretti after he defaulted on his loans. Last year, the French bank spun the company off into a new holding company, Consortium de Realisation, or CDR, which is charged with getting rid of billions of dollars of the bank’s assets.

Although MGM has lately enjoyed success, with such box-office hits as “The Birdcage,” “GoldenEye” and “Get Shorty,” most Hollywood executives who came away from the bidding process said they felt the hoped-for price of $1.5 billion to $2.5 billion was too high. One reason is that key parts of the company’s library--such as its video rights--are tied up for years through previously negotiated licensing deals. In addition, bidders would have to invest considerable money into MGM.

A timetable has yet to be established for when a decision would be reached. A CDR executive was quoted as saying a decision would be made by July 14. One executive close to the bidding put no stock in that statement, saying the date was “made up.” A U.S. spokesman for Credit Lyonnais said “it could be a few days, it could be a few weeks.” One bidder added, “There is still a lot of positioning to be done. A lot of games to be played before this is over.”

There also was confusion over the bid by PolyGram, which has long been regarded as a front-runner. The company is said to be waiting until a board meeting on Thursday to decide whether it would bid, despite the Monday deadline.

PolyGram is believed to have provided a contingent bid pending board approval. Several PolyGram executives had tried unsuccessfully for months to move up Thursday’s board meeting to accommodate the timetable for MGM bids set by investment bank Lazard Freres & Co., which is handling the sale.

The bidding came after a scramble for partners. Murdoch reportedly has ties to German media tycoon Leo Kirch. Morgan Creek teamed with Korean industrial giant Daewoo and Japan’s Fujisankei Communications. New Regency has the backing of Korea’s Samsung. Both New Regency and Morgan Creek also would have support from Warner Bros., where each is a major supplier of films. But sources suggested Regency’s interest has eased and it may have offered a low bid.

General Electric Co. and its NBC unit, which have some of the deepest pockets in corporate America, have been rumored to be major backers of the MGM management team’s bid. But sources close to GE downplayed its involvement, and another executive said it is only committed to a minor investment. New York bank J.P. Morgan has been trying to raise money for the management group.

Further alliances are possible, including, sources said, MGM’s management teaming up with PolyGram.

The least-known name in the mix is Ackerman’s. Once a star junk-bond salesman under Michael Milken at the now-defunct Drexel Burnham Lambert investment bank in the 1980s, he now runs an investment firm.

Ackerman, operating in the 1980s out of Milken’s Wilshire Boulevard office in Beverly Hills, once reportedly received $135 million in bonuses in a single year when junk bonds--used extensively to raise money by corporate raiders and fledging companies--were hot. Before Drexel’s collapse, Ackerman was transferred to London, where he was head of its International Capital Markets Services Group.

What is attracting bidders is the MGM/UA library of about 1,600 films, which companies can exploit and sell as packages to foreign television and other businesses. Titles include the Rocky series, the James Bond films, “Annie Hall,” “Raging Bull” and “Thelma and Louise.”

Once Hollywood’s premier studio, when it turned out such films as “The Wizard of Oz,” “Ben-Hur” and Gene Kelly musicals, MGM today hardly resembles what it once was. The studio’s library of classic films was sold to Turner Broadcasting System in 1986 by owner Kirk Kerkorian, who later sold the studio operation to Parretti. Its historic lot in Culver City also was sold off and today is occupied by Sony Pictures Entertainment.