MGM film studio headed for bankruptcy

http://www.guardian.co.uk/business/2010/oct/30/mgm-film-studio-rescued-bankruptcy

MGM film studio headed for bankruptcy
Studio famous for Wizard of Oz and Singin' in the Rain faces bankruptcy after creditors vote for reorganisation under deal with Spyglass
Edward Helmore in New York
The Guardian, Saturday 30 October 2010

Metro-Goldwyn-Mayer, the legendary film studio famous for classic movies such as The Wizard of Oz, Gone with the Wind and Singin' in the Rain, is set to file for bankruptcy within days. The move comes after creditors approved a plan to restructure its $4bn (£2.5bn) debt under the protection of insolvency courts and place the company under new management.

Resolution of the long-running saga of the studio's finances came after creditors rejected an aggressive takeover bid by corporate raider Carl Icahn. A reorganisation will require MGM to declare a chapter 11 bankruptcy in order to renegotiate its mountain of borrowing.

Icahn, who holds as much as $800m of MGM debt, had been campaigning for Lions Gate Entertainment to take over the firm. Yesterday Lions Gate sued Icahn claiming he was planning to buy a stake in the company and was offering to buy debt from other MGM creditors in an effort to gain control of the studio's fate himself.

Spyglass Entertainment, a small production company half-owned by private-equity firm Cerberus Capital Management, is now set to take over the company.

Under the new management, MGM is expected to make just four to six movies a year, most with modest budgets of $50m. Gary Barber and Roger Birnbaum, founders of Spyglass, have said they aim to be ruthless about costs, outsource distributing films to theatres and focus on the TV business and online services .

But the plan is considered a gamble. MGM faces bankruptcy in part because the DVD and film catalogue business attached to its 4,100-title film library no longer generates enough to service the firm's debt.

A plan earlier this year to bring in director Ridley Scott to serve as creative head along with his brother, Tony Scott, was seen as incoherent and was rejected.

But Spyglass's budget movie plan is considered risky by Hollywood veterans who warn against trying to run a studio on the cheap.

"Part of MGM's problem has always been that many of its owners are financial players more focused on the short term," Clark Hallren, a consultant and former banker for MGM, told the LA Times. "Being in the entertainment industry is typically a long-term play because of the nature of distribution and massive amounts of capital needed."

Joe Roth, ex-head of Walt Disney Studios, said MGM's rescuers had to be bold. "You either compete head-on or not at all," he said. "By making half-efforts, you never get the right product or talent."

Time Warner AOL discussions

http://news.cnet.com/8301-1023_3-9992465-93.html

Yahoo and Microsoft step up Time Warner AOL discussions
July 16, 2008

Yahoo and Microsoft have both accelerated their respective deal-making talks with Time Warner's AOL, as a proxy fight looms less than three weeks away between Yahoo and investor activist Carl Icahn, according to a source familiar with the discussions.

"The ongoing talks between all the companies have recently picked up," said the source.

That may come as no surprise, given that Yahoo over the weekend rejected a sweetened Microsoft offer to buy just its search assets and the board of directors for the Internet pioneer will be up for grabs when Yahoo and Icahn face off at the August 1 annual shareholders meeting.

Specifics about the types of deals that are currently underway in these two separate discussions and the likelihood of an outcome are not clear.

But previously, talks between Yahoo and AOL reportedly involved discussions of Yahoo acquiring AOL and, then, Time Warner taking an investment in Yahoo.

And as noted in the Silicon Alley Insider last month, a Microsoft buyout of AOL could come sooner than later. In fact, Silicon Alley Insider posted this nugget Tuesday that a team from AOL was in Seattle to talk about a potential deal with the software giant.

And a report in Reuters Tuesday was the first to note talks had "heated up" among the three parties.

Motorola Renews Itself Through Spinoff

http://www.forbes.com/markets/economy/2008/03/26/motorola-restructuring-update-markets-equity-cx_vr_0326markets16.html

Motorola Renews Itself Through Spinoff
Vidya Ram, 03.26.08

LONDON - Motorola has taken heed of pressure from shareholders including billionaire Carl Icahn, and announced it will spin off its mobile handset business.

Motorola shares rose 1.5%, or 15 cents, to $9.91, on Wednesday morning, after a pre-opening rally of over 9.0%.

The changes will be made in 2009, under which two publicly-listed companies will be created, one focusing on mobile phones and the other bringing together Motorola's home and networks business, which sells TV set-top boxes and modems, and its enterprise mobility unit, which sells computing and communications equipment for businesses.

Motorola expects the transaction will be tax-free, allowing shareholders to own stock in both the new companies

Nomura analyst Richard Windsor said this represented the best deal for shareholders. "It is the least disruptive remedy to their recovery plan for their mobile phone division," he added.

He said the company would have struggled to get a good price if it had chosen to sell its mobile handset division, which has suffered from a slump in sales thanks to stiff competition from the likes of Nokia and Sony Ericsson.

"Our decision to separate our Mobile Devices and Broadband & Mobility Solutions businesses follows a review process undertaken by our management team and board of directors, together with independent advisors," Chief Executive Greg Brown said in a press release.

"Creating two industry-leading companies will provide improved flexibility, more tailored capital structures, and increased management focus - as well as more targeted investment opportunities for our shareholders."

Motorola launched a strategic review in January, following a weak set of fourth-quarter earnings that were weighed down by troubles at its handset business, which has failed to repeat the success of its Razr phone.

Just ahead of the announcement, UBS analyst Maynard Um cut his estimates for sales of Motorola handsets for 2008, by 9.0%, to 146.5 million, despite Motorola's plans to launch several new 3G phones and low-cost handsets targeted at emerging markets.

Icahn had pressed for the spin off and for the appointment of a new chief executive for the division, arguing that the company functioned as a conglomerate, and a carving off the handset unit was in the best interests of shareholders. (See: "Icahn Rattles Motorola")

Thomson Financial contributed to this report.