MGM Going Bankrupt. James Bond And THE HOBBIT In Trouble

It’s weekend, I’m off to watch some movies but before I go, I think you might wanna know a pretty disturbing info regarding MGM studio, it’s having financial trouble and it might hit the 007 franchise badly, not to mention THE HOBBIT. Here’s an excerpt from Deadline Hollywood so you can get an idea of the situation at hand and understand the options on the table, what do you think MGM should do?

MGM made a desperate plea for money because the studio had missed its numbers and was going to be out of funds very soon. “The implication was that it’s teetering on bankruptcy,” one source told me. MGM said it needed $20M in short-term cash flow to cover overhead, and an additional $150 million to get through the end of year and continue funding its projects, and to start Peter Jackson’s Hobbit.

The conference call was planned to present the creditors with a request, or forebearance, to waive interest payments on MGM’s $3.5 billion killer debt until February 2010. Because if MGM doesn’t have to make those interest payments, then the studio can afford to use that money instead to fund the production slate.

So the bondhholders said to MGM, in essence, that they were going to let the studio go bankrupt and collect their money since they’d be first in line to get paid. But Cooper explained that this would be the worst possible outcome for the creditors and the company. Because if MGM were forced into bankruptcy, then it would lose James Bond and the studio doesn’t think it can stay alive without 007. Also, a lot of other issues would surface that would tremendously hurt MGM.

Also, if MGM goes through bankruptcy, that’s a very expensive prospect (where only the lawyers get rich), and extremely disruptive (since who would do business with MGM in the interim) and won’t get the creditors what they want which is their money back. It’s more than simply MGM losing Bond. The studio could lose a lot of other franchises.