He’s Baaaaaack: Kerkorian Is Part of Effort to Bid for MGM

In a move that has heads shaking in Hollywood, investor Kirk Kerkorian has positioned himself to once again own the lion’s share of Metro-Goldwyn-Mayer--the famed studio that the reclusive Las Vegas billionaire became notorious for having dismantled during his 20-year reign.

Kerkorian’s Tracinda Corp. officially emerged Friday as the major equity backer for a management buyout bid led by Frank Mancuso, MGM chairman and chief executive.

Australian television and cable network Seven Network is also backing the bid, which sources estimate to be around $1.3 billion. Working capital and credit facilities for the transaction will be arranged by J.P. Morgan & Co. It costs an estimated $700 million to $750 million a year to keep MGM going as a full-fledged production and distribution company.

At $1.3 billion, this would put Mancuso’s offer in the competitive range of other serious MGM bidders, who include PolyGram, Morgan Creek Productions and Rupert Murdoch’s News Corp. Revised bids were submitted Thursday to investment banker Lazard Freres & Co., which is conducting the MGM sale for Consortium de Realisation, an affiliate of current owner Credit Lyonnais.

Sources said the 79-year-old Kerkorian--whose fortune was estimated at more than $2 billion last year by Forbes magazine--is kicking in more than 50% of the bid, or just under $700 million, and that Seven’s contribution is around $250 million.

Tracinda owns the MGM Grand in Las Vegas, the world’s largest hotel. Last year, with Lee Iacocca, Kerkorian made a startling $22.8-billion takeover bid for Chrysler Corp., which was rebuffed. Kerkorian remains Chrysler’s largest shareholder.

Seven Network, based in Sydney, is one of Australia’s three commercial television networks. Bids for MGM are currently being evaluated by Lazard, and exclusive negotiations with a favored bidder could begin as early as this weekend. PolyGram is considered the front-runner.

Kerkorian could turn out to be the white knight that Mancuso has been seeking for months to pull off his dream of becoming part-owner. He and his management team have recently reinvigorated the ailing studio with such box office hits as “GoldenEye,” “The Birdcage,” “Get Shorty” and “Species.”

Along with Mancuso, MGM’s key managers include MGM President Michael Marcus and United Artists President John Calley.

If the Mancuso scheme emerges as the winning bid, it would be the third time for Kerkorian to own part or all of MGM.

He first bought the studio in 1969, then sold it to Ted Turner in 1986. No sooner was that deal done than Turner realized he couldn’t afford it. Kerkorian then repurchased the studio, but Turner kept the valuable pre-1986 MGM library, a gold mine of about 3,000 titles that includes such movie classics as “Gone With the Wind,” “Singin’ in the Rain” and “The Wizard of Oz.”

Turner sold back to Kerkorian the MGM logo and all the United Artists assets--including such valuable movie franchises as the James Bond, “Rocky” and “Pink Panther” series.

In the mid-1980s, Kerkorian also sold off MGM’s famed Culver City movie lot--today the home of Sony Pictures Entertainment. Then in 1990, he sold what was left of the studio to Italian financier Giancarlo Parretti. Two years later, Credit Lyonnais seized the studio after Parretti defaulted on his loans.

Kerkorian has long been perceived in Hollywood and on Wall Street as the man who single-handedly dismantled MGM piece by piece--a point of view the financier’s allies say is undeserved.

“The perception has been warped in this community for too long,” said Kerkorian’s longtime spokesman Jim Mahoney. “He never tried to dismantle the studio. He tried to build it. He bought the studio and sold it in total to Ted Turner. When Turner couldn’t afford it, he bailed him out by buying it back.”

There are many in Hollywood who see great irony in a Kerkorian-MGM comeback.

“He can come in as the white knight and sell it in a year,” said a prominent industry insider. “He’s a trader, not a holder.”

Times staff writer Nancy Rivera Brooks contributed to this report.

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