Media Executive to Head MGM

Veteran media businessman Harry E. Sloan on Monday was named chairman and chief executive of Metro-Goldwyn-Mayer Inc.

Sloan, 55, also is investing in the Los Angeles company, now owned by a consortium of four private equity firms and two media companies, Sony Corp. and Comcast Corp.

Through a cash investment and stock options he may potentially earn, Sloan could own about 5% of MGM, said a source familiar with the matter. In a phone interview Monday, Sloan declined to reveal his investment but called it “substantial.”

The MGM investors bought the once-venerable movie studio last year for nearly $5 billion. Although independent, the company operates similar to a label of Sony Pictures, which now releases MGM’s movies in theaters and on DVD. MGM executives oversee the licensing of the company’s library of 4,000 films and 10,000 TV episodes.

MGM’s biggest equity investors, led by Providence Equity Partners (29%) and Texas Pacific Group (21%), had been looking for months to hire an experienced CEO. Sloan has served on MGM’s board since June.

Over the last two decades, Sloan invested in and helped build three publicly traded media companies: Lions Gate Entertainment Corp.; New World Entertainment, which he bought from director Roger Corman in 1983 and sold six years later to investor Ronald Perelman; and European media company SBS Broadcasting, which he founded in 1990.

Last week, Sloan completed the sale of SBS for about $2.6 billion to private equity firms Permira and Kohlberg Kravis Roberts & Co.

Providence, with which Sloan has a long-standing relationship, approached him about assuming the chairmanship of MGM shortly after the sale of SBS was announced in August.

Sloan said he planned to return MGM to its former status as one of Hollywood’s major movie suppliers by tapping his expertise in independent film financing and enlisting the kind of low- to moderate-budget movie strategy that he applied at Lions Gate and New World.

“MGM is the best movie brand in the world,” he said. “In five years, there will be 400 million new digital homes in the world, and given my experience internationally, I think MGM is the perfect asset to develop to that end.”

Since being sold, however, MGM has dramatically scaled back its operation. The company has slashed its staff from 1,500 to about 450 employees and plans to further shrink its ranks to as few as 200. Although MGM cofinances a certain number of films a year with Sony, which owns 20% of the company, it has ceded creative say on their joint projects, including the “James Bond,” “Rocky” and “Pink Panther” franchises.

But Sloan vowed that MGM would be back in the movie game shortly, making more of its own films and launching digital channels worldwide.

“We’re going to be a significant player in the movie business,” he said.