Metro-Goldwyn-Mayer Inc. (MGM), a privately-held media company, is exploring strategic options, including a potential sale of the company, to repay its huge debt as its home video market has gone adrift. 

The company owns the world’s largest library of contemporary films of approximately 4,000 titles and over 10,400 episodes of television programming, including movies like James Bond, Pink Panther and Rocky. Its film library has received 205 Academy Awards, one of the largest award winning collections in the world. However, the fortunes of the company have plummeted in recent times as DVD sales have slumped industry wide, leading to an overall decline in its home video market. 

Currently, MGM has approximately $4 billion in debt, including $3.7 billion in bonds maturing in mid-2012 and a $250 million revolving credit facility with JP Morgan due in Apr 2010. The consortium of 140 lenders has provided an extended deadline for interest payments till Jan 31. Although MGM has the required cash on hand to make the interest payments, the extended repayment period would enable it to complete the current movies in its pipeline. 

The lenders have also agreed to seek external investors for a new partnership, investment, or sale of the company in its entirety or partially. Time Warner Inc. (TWX) and News Corp. (NWSA) have emerged as potential buyers of MGM studio. MGM is owned by an investor consortium comprising Providence Equity Partners, TPG, Sony Corporation of America, Comcast Corporation, DLJ Merchant Banking Partners and Quadrangle Group.
Read the full analyst report on “MGM”
Read the full analyst report on “TWX”
Read the full analyst report on “NWSA”
Zacks Investment Research