MGM's problem is Stargate's problem

by Paul William Tenny

MGMThere are a lot of reasons why a planned film gets delayed, probably too many to count. Often those reasons pile on top of each other and can't easily be pulled apart again for quick and easy blame. But the case for the two pending direct-to-DVD Stargate films is much more clear than that.

Put simply, MGM -- the studio that owns the entire Stargate franchise -- is a zombie that is essentially bankrupt.

The studio has only nearly averted chapter 11 on multiple occasions over the past 12 months and the only thing keeping that from happening this month are desperate promises that the studio can sell itself in whole, rather than being sold off in pieces and liquidated.

What's happening right now is MGM has opened its books under strict non-disclosure agreements to potential buyers so that suitors they can get a good look at all of MGM's obligations and revenue. Some of that is publicly know. The New York Times reported on Sunday that MGM holds about $3.7 billion in debt, more than the studio is probably worth if it was flat out liquidated. But that's not really the bad news, it's the interest owed on that debt which runs over a quarter of a billion per year which is just strangling the studio from making any headway.

According to the Times, most of the offers on the table are "weak", in the league of Time Warner, which supposedly only offered between $1-2 billion. An anonymous source also told the Times that any accepted bid would necessitate MGM entering chapter 11 to clear most of its existing debt. It's rare for any company to go through that process without making significant sacrifices.

With all this going on -- and it's been a known thing for a while now -- it's actually very clear why MGM hasn't greenlit the two pending Stargate films which they've already had scripts written for: they can't afford it.

While I am speculating here, I'm not exactly guessing or inventing rumors. Everyone knows that MGM has been hanging off a cliff and yet putting the Stargate movies into production would only help their situation because they make money. If they could, they would, and I'm sure they'd very much like to do that.

It's just not possible right now and I fear the Stargate movies aren't going to be produced until after MGM settles this mess, and that could take quite a while, if it gets settled at all.

in Business, Film


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