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MGM's Bankruptcy Puts James Bond and "The Hobbit" in Jeopardy

Posted: September 25th, 2009 by WorstPreviews.com Staff
MGMSubmit Comment
DeadlineHollywood is reporting that MGM held a very long conference call with bondholders/lenders that caused lots of people to become "very loud and very upset." It turns out that the studio is on the verge of bankruptcy.

The call was to make a desperate plea for money in the amount of $20 million in short term and another $150 million to get through the rest of the year. One major project that MGM needs to fund is Peter Jackson's "The Hobbit" prequel.

In addition, MGM is $3.5 billion in debt and has requested that the bondholders waive the company's interest payments until February 2010. The bondholders know that they probably won't get all their money back if MGM goes bankrupt, since it's only worth about $1.5 billion. Unfortunately, that's exactly the direction they want to go in.

What this means is that if MGM goes bankrupt, it will lose the rights to James Bond (to pay part of the debt) and "The Hobbit" could be delayed indefinitely. The next step is for the bondholders to have a vote to decide MGM's fate. Stay tuned.

Source: DeadlineHollywood

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Displaying 57 comment(s) Profanity: Turn On
RobertHolik writes:
on September 25th, 2009 at 7:32:33 AM

Wow, they're more f*cked than someone who just dropped the soap in prison.
SpookyCupcakes writes:
on September 25th, 2009 at 7:57:14 AM

"MGM's Bankruptcy Puts James Bond and "The Hobbit" in Jeopardy"


f*ck these new james bond movies, they suck so much d*ck. Like I give a sh*t if water prices in bolivia are going to go up. It's not even all of the water, only 60%, not only was the story sh*tty, but the villian (called elvis, lol) is even more incompetant than daniel craig's James Bond is.
VDODSON writes:
on September 25th, 2009 at 7:59:21 AM

Craig plays a great Bond, the best since Connery. The storyline for the second I will admit was wanting.
Armpit writes:
on September 25th, 2009 at 8:36:10 AM

I find it's a shame first of all for any company to pack it in. There are going to be 1000s of jobs lost and much more affected.

Now, I also want to say that for my part, I liked the Bond reboot. I hate reboots altogether but I don't think that Bond had his place in the old format in this World anymore.
on September 25th, 2009 at 9:58:46 AM

No Hobbit Movie?? That's more wrong then two boys f*ckin'!! This news makes me wanna punch a nun!
Johnny Neat writes:
on September 25th, 2009 at 10:06:12 AM

f*cking morons, how the f*ck is this even possible?
BlueMobius writes:
on September 25th, 2009 at 10:07:41 AM

How the hell does a studio go into debt? Someone should fire their accountants. Unbelievable.
eViL.kEv2 writes:
on September 25th, 2009 at 10:15:05 AM

Christopher Tolkien and all the other family leaches must have sh*t their pants when they heard this! Now they might have to go get jobs.
Armpit writes:
on September 25th, 2009 at 10:20:54 AM

Actually, if this happens - because this hasn't yet happened - some other studio will simply buy their catalogue. I don't think they'll sell Bond for 100 million - they'll sell everything as a package for 1 billion or something.
Remember these studios make tens millions in a day but they also spend tens of millions in a day. It happens all the time. It'll just have a funny ring to have Coca Cola be the owner of James Bond - "I'll have my Cola shaken - not stirred"...
rabid writes:
on September 25th, 2009 at 11:42:57 AM

Leaves me sad for the Bond film, but I could give a flip about the Hobbit. Anything Tolkein just ends up boring.
TH3D4RKKN1GH7 writes:
on September 25th, 2009 at 11:56:10 AM

How the f*ck does MGM go bankrupt when they have Bond. If when they kick out bullsh*t bonds like Question of Sport(QoS) it takes like 500 million. They at least got a 250 million profit on that one. Ah I don't get this.
buttabean writes:
on September 25th, 2009 at 12:14:11 PM

Someone was stealing money I'm sure. How the hell could this have happened...
Nkariunas writes:
on September 25th, 2009 at 12:20:01 PM

Maybe this is a sign that the bond legacy has to find a new distributor or company, an the hobbit should return to new line.
Horsemoney5 writes:
on September 25th, 2009 at 12:20:31 PM

"This news makes me wanna punch a nun!"
lol pretty hostile for a meditating Iron Man
TRUEMAN writes:
on September 25th, 2009 at 12:31:23 PM

ah capitalims a love history hahahahah!
thedudeman69 writes:
on September 25th, 2009 at 12:42:32 PM

why the f*ck would the hobbit be made by a studio like MGM? what happend to new line
Armpit writes:
on September 25th, 2009 at 2:15:42 PM

"How the f*ck do you go bankf*cked when you own James Bond?"
Let this old fart tell you a story.
Star Trek movies with the original cast when they firt started costed so much money that that they actually broke even in domestic and partly oversea theatres. They made the bucks when went to vhs, sold toys, mags, music and a piece of Shatner's toupee.
It's like I said they make 100 million but they need to invest 97 million so - it's big bucks BUT, just changing hands. When you see James f*cking a girl - there's a hundred guys behind that f*ck - the makeup f*ck, the one who directs the f*ck, the one who decorates the place for the f*ck, the one who builts the place for the f*ck - and so many other f*cks.
Another point is that making money is not enough for a studio. If after a Bomb flick they find that for all their effort it comes to 10$ an hour each - it's not worth it. They'll go on to another project. They are greedy bastards that want 100K each. If Heinz predicts that they're gonna make 500 million in a year and only make 450 - they put it down as a loss of 50 million.
Ranger writes:
on September 25th, 2009 at 2:21:06 PM

I don't know who is doing their financial reporting (within the Company, I'm not talking about DeadlineHollywood)?

1. A company $3.5 billion is debt can't be saved by a $20mil to $150mil cash infusion.
2. A company with $3.5 billion of debt is NOT worth $1.5 billion (I suspect they're counting assests here)... they are worth nothing! The very definition of 'net worth' is 'assests - debt'... duh! If they can't grasp something that obvious, they ARE worthless.
minkowski writes:
on September 25th, 2009 at 3:14:06 PM

It would seem to me that MGM is actually worth a very cool -2 billion. But I'm not sure if the 1.5 billion includes *all* of MGM's liquid assets.
RickyGabrielBird writes:
on September 25th, 2009 at 4:01:57 PM

It amazes me how they get to 1billion in debt and not raise alarm bells. Who the hell does their books?

Its companies that run like this that ruin the world economy.
Trip Maverick writes:
on September 25th, 2009 at 4:15:16 PM

I thought Sony had bought the rights to Bond off of MGM? Also I thought Hobbit was being made by new line which is part of Time warner?
kmccarney88 writes:
on September 25th, 2009 at 4:17:46 PM

It never ceases to amaze me how f*ckin stupid some people really are.

BlueMobius asks "How the hell does a studio go into debt? Someone should fire their accountants. Unbelievable."

Are you serious?? Are you really that idiotic? One word for you------PIRACY.

If a company spends $100 million dollars on a movie and 500,000 people (or more) download it (like on Wolverine) and ticket sales are at $8.50 then you have just lost $4,250,000 over-night! Now add that to pretty much every movie that is released these days and you come up with some pretty high numbers, numbers that will send a company straight into bankruptcy. Common sense mate.....

For all you *ssholes out there who continuously illegally download movies, you are to blame for this.

And just so all you other "not too bright" individuals reading this are clear, MGM isn't the only one in danger of going under due to low profit margins and/or debt problems.

In other words, pay for you movies.

@Thedudeman69 & Nkariunas - New Line Cinema is gone and has been for well over a year now. They merged with Warner Brothers in February of 08 and now act as a "unit" of Warner Brothers, they are no longer a "independently" working production company.

At this point, the best thing MGM can hope for is to get the money to finish up The Hobbit! The Lord of the Rings Trilogy grossed $2.97 Billion, there is no reason why The Hobbit & Hobbit Sequel wont make similar numbers.....that is if pirate bitches actually go to the theatre. That way they can at least pay back a large majority of the debt they owe. Then if they sell the bond franchise they should be even closer to paying everything off, but either way they look f*cked.

minkowski writes:
on September 25th, 2009 at 4:30:48 PM

If piracy is the cause of MGM's financial woes, why is MGM the only studio going bankrupt?

And yes, other studios are facing financial difficulties. It's called a RECESSION! Almost every company in America is suffering some sort of economic restructuring. Not just MGM. We just came out of the the worst economic downturn in decades. And here you are blaming piracy.

And let's not even mention the fact that the overwhelming BULK of people downloading pirated sh*tty cam films wouldn't have paid to see the film anyway.

Your theory holds no water. And according to Variety and the NYT:

"As of mid-2009, MGM had US$3.7 billion in debt, and interest payments alone totalled $250 million a year. MGM earns approximately $500 million a year on income from its extensive film and television library, but the economic recession is reported to have reduced this income substantially."

Recession, not f*cking piracy.

And MGM has experienced serious problems since the 1990s, well before mass piracy and high-bandwidth:

"Despite a few commercial successes, such as Thelma and Louise, Crédit Lyonnais was unable to stem the tide of red ink during the mid-1990s; putting the studio up for sale, it found only one willing bidder: Kirk Kerkorian. Now the owner of MGM for the third time, Kerkorian at last conceded that a solid business plan was the studio's only hope. Crédit Lyonnais then ordered Kerkorian and the Board of Directors of MGM to fire Alan Ladd, Jr. as CEO of the company and replace him with former Paramount executive, Frank Mancuso Sr. By committing to more and better pictures, selling a portion of the studio to Australia's Seven Network, and installing a professional management team, Kerkorian was able to convince Wall Street that a revived MGM was worthy of a place on the stock market."

TeemSelami writes:
on September 25th, 2009 at 4:49:29 PM

minkowski writes:
on September 25th, 2009 at 5:18:40 PM

In fact, 2008 BO numbers are identical to 2007 numbers, which when adjusted for inflation, shows that admission actually declined 4%, less than other industry sectors for sure, but still a decline.

Christmas ticket sales were actually under the 2007 mark.

The only conclusion is that the entertainment weathered the economic downturn better than other industry sectors, but it was still suffered a decline.

Check some facts next time.
minkowski writes:
on September 25th, 2009 at 5:26:05 PM

"Piracy, not the Recession, is to blame. "

You restating your claim sans facts reminds me of a Goebbels quote:

If you tell a lie big enough and keep repeating it, people will eventually come to believe it.
Ranger writes:
on September 25th, 2009 at 5:52:04 PM

@VDOD - yep Connery first, with Craig a close second.

I was just at a video store today (Blue Brothers and Das Boot - Director Cut buys) thinking of this thread.

Of all the MILLIONS of $'s MGM has made... of BOND ALONE! This bankruptcy is even harder to understand. I mean... THEY OWN BOND FOR f*ck'S SAKE!!!!
J_e_f writes:
on September 25th, 2009 at 6:02:05 PM

Wow, it's like The Hobbit is not meant to be.
gparks writes:
on September 25th, 2009 at 7:29:09 PM

The reason MGM is in debt, is because that is how EVERY movie studio finance their movies - debt. Each of these movies costs over $100 million to make, and they are always making dozens of these films at a time. It is impossible for them to have that much money on hand at a time, so they borrow money to finance these movies, all of which generally have an interest rate around 8% per year. The reason that MGM is in trouble is because they've released generally aweful movies over the last few years, and so they haven't gotten the cash returns that they need to pay off the interest. That, added to the fact that the economic crisis has made borrowing money much more difficult and expensive has them way underwater in terms of debt and liquidity.

SACdaddy writes:
on September 25th, 2009 at 7:50:49 PM

Sounds like Bond isn't in jeopardy (but is he ever really). Other studios have wanted to get their greedy little paws on the Man for years now. They'll jump on that sh*t faster than James jumps on p*ssy in the casino. Maybe its a good thing. I like Craig but the Bond character has to get back to more pimpin, more gadgets, and better bad guys like the Flemming novels pushed. I can't take too many more sensitive shower scenes (not involoving sex) or midget Eco terrorists named after rock n roll legends.

MGM is in trouble because Bond is the only thing it has now. FAME! I mean come on, really? Somebody was allowed to make this knowing the company's financial situation? If they want to save money, they should fire the high priced *ssholes who greenlight stupid sh*t like this. They said they needed $20 mill for the time being? FAME cost $25 mill and nobody even knows its out now.
scantraxxroots writes:
on September 25th, 2009 at 8:06:06 PM

I didnt think i would be so f*cking depressed the day i heard this kind of news

where do i go in life now.
bacci40 writes:
on September 25th, 2009 at 8:34:26 PM

will the bankruptcy judge make them open their real books? this is such bs...they arent bankrupt...and christ, will people stop slamming tolkien's airs...they have every right to sue...too bad your slacker parents never did sh*te with their lives
triggax writes:
on September 25th, 2009 at 8:53:40 PM

Who cares... Everybody's out of money... They really should have just stopped the bonds after casino royale anyways.. it would have made an excellent finishing touch to the series... I could care less if I ever watch another bond flick.. and as far as The Hobbit goes, I could give a sh*t.. I couldn't be bothered to even sit through the LOTR movies after suffering through the books... though I did, and for what it was worth they were impressive films, but f*ck me, such gay ass nerdy bullsh*t.. So who gives a sh*t about the Hobbit... Not me... thats who... f*ck you.
vwkombi writes:
on September 25th, 2009 at 10:03:15 PM

f*ck the new James Bond films.

"Ohh no, a scrawny french emo kid is going to win a poker tournament. QUICK SEND IN JASON BOURN----- I MEAN, OUR COMPLETELY ORIGINAL JAMES BOND!"
nope.com writes:
on September 25th, 2009 at 10:25:53 PM

Nobody cares about the little hobbit... only Bond is of concern here
Ranger writes:
on September 25th, 2009 at 11:01:15 PM

@SAC - 'Fame' is out now? Oh yeah... I 'reviewed' it here on WP.
FFantasy1984 writes:
on September 25th, 2009 at 11:34:34 PM

I'm not really sure that not making The Hobbit is a big loss. I love all of Tolkien's books but the movie just sounded like a way to make money that would suck. And I thought they were done making James Bond movies, but maybe I was wrong.
TH3D4RKKN1GH7 writes:
on September 25th, 2009 at 11:45:02 PM

I wonder who will take up Bond after MGM takes a dirt nap.
rabid writes:
on September 26th, 2009 at 2:59:58 AM

I was reading an article about this a few days ago. They were a couple billion in the hole, which isn't that abnormal, but they were laying blame on the Wall Street Journal for exacerbating their situation and destroying their stock.
The bondholders will rally and find someone to float them for a while. Noone wants to sit idly while their investments crash, especially knowing that they're soon going to be profitable.
TH3D4RKKN1GH7 writes:
on September 26th, 2009 at 3:05:34 AM

While I know it's true that entertainment, especially movies, tend to stay afloat and even do well during economic hardships, and that piracy is quite a huge issue in the industry. I'm not gonna make a wild claim and state that piracy is the main issue this company fell. Naw, poor management seems to fit the bill. I keep going back to 250 million dollars to make QoS and you give it to Marc Foster... complete madness. But I'm no expert on this business stuff, I'm just a director lol.
rabid writes:
on September 26th, 2009 at 3:27:38 AM

I believe them when they claim piracy hit them hardest, but just like the music industry, it's their own fault for not adjusting to the times. They should've found a new business model a decade ago to compensate.
Ranger writes:
on September 26th, 2009 at 3:46:41 AM

QoS was $250mil to make?!?!
TH3D4RKKN1GH7 writes:
on September 26th, 2009 at 3:57:26 AM

Sorry 200 million Ranger. Still too f*cking much. Only grossed 586 and that's a worldwide number.
Ranger writes:
on September 26th, 2009 at 6:50:50 AM

Either way... you're right. That IS way too much! Spend money like it's water and one day it dries up... what were the odds?!
Eben1277 writes:
on September 26th, 2009 at 9:04:08 AM

I don't go to the movies when money is scarce, but I don't DL them either because I can't be bothered to sit through garbage, or sift through sh*t until I find a good copy... And this recession is hitting a little harder, normal recession proof industries are suffering. My wife works for a beer distributor (not the beer and soda store down the street, but the place that supplies the beer and soda store down the street, the bars, and the supermarkets) and they're having layoffs. You can blame the falling apart of the music industry on piracy, but going to the movies is an experience that can't be replaced by download. An experience that is getting more and more costly. People not going to the movies because they don't have the resources to throw away 7 dollars on popcorn 5 bucks on a soda and 4 bucks on some raisinettes in addition to the 10$ on the movie ticket is a more reasonable explanation for a slump in theater attendance than people are all sitting at home watching pirated copies of transformers 2. Even the strip clubs are suffering right now. And just because the economy turned down last year doesn't mean it isn't still down now.
rabid writes:
on September 26th, 2009 at 12:39:46 PM

Only a fool pays for what he can get for free.
Armpit writes:
on September 27th, 2009 at 3:40:33 PM

KMC - your head is up your ass - and so deep that sh*t is coming out of your mouth and your posting it!

Piracy is a drop of water in the ocean!

When the first tapes that could make copies directly from the radios came out - d*cks like you thought it was the end of music being sold. ...seems we still have some music.

Then music, videos, dvds and copies from computer - yet - the sales of movies has never been so high as it is today.

These things "work themselves out". For example - I bought the first Smallville music cd because I'm a fan - for others - there were extras on the cd that functionned on the computer. Whatever product in any format is created - there is always a side culture that dubs it.

The problem with MGM or any studio - or any empire comes from within. Politicians never worry about the opposition - it's from within that the knives are thrown in your back. So, if Bond's next mission is cancelled - don't blame pirates - blame it on the studio who can't adapt. ...and frankly - James Bond has been in trouble for a number of years - only Casino Royal has been able to give it back it's shine. Unfortunately, it's sequel was pretty weak. Before that - Pierce - what a crock of sh*t! My paralyzed goldfish could kick this guy's ass. Pierce Bronsnan's James Bond - two words: invisible car... That's the balls! ...and then we go to Timothy Dalton who's got more mental problems than all of us together here - that says a lot. A little before - we had Mr Avon - Roger Moore who wore more makeup than Liberace. Even in his "hot" Bond years - the plot of the stories were old.
Boned, James Boned.
Ranger writes:
on September 28th, 2009 at 2:03:33 AM

Armpit - thx. I almost had that f*cking invisible car blocked out of my head... and here you are tearing that bandage off my hairy arm!!!
TH3D4RKKN1GH7 writes:
on September 28th, 2009 at 2:58:26 AM

Say whatever you want about Bond films, their depth, or what you think of the casting decisions, the film still sells. Bond's never been in "trouble" over 500 million at the box office is far from "trouble". People love to pass around their ideas as gospel.
Armpit writes:
on September 28th, 2009 at 9:26:08 AM

Th3D0irk - whatever the f*ck your name is - I can't spell it - even less say it.
I don't have numbers for oo7, all I'm saying is that Bomb was a tired routine after the 3rd Connery but the pimpled teens kept it alive anyways. These movies have excellent production values and so on. However the story is the same in every one of them. There are (to be argued if you like) a handful of original movies in there. The first Sean was a breakthrough, Lazenby getting married, Timothy giving up the job to avenge his friend and Casino Royal was an electric defyb for the series. Other than that, James retrieves the "gadget", kills the baddie in some funny/mean way and sleeps with the beauty. I've just summed up all the Bond movies.
Range, sorry for the mention of the invisible car - which makes us wonder why they can't use it on a human too...or...anyways... On the barf meter - remember when Bomb drives a space shuttle to save humanity? This villain is going to poison all people on Earth - fortunately Bomb stops him - or is it the aliens from Independance Day? I forget.
Space_Ghost11 writes:
on September 28th, 2009 at 12:23:58 PM

I dont care, and really stopped caring awhile ago about the Bond films. The Hobbit though they need to save! come on!
TH3D4RKKN1GH7 writes:
on September 28th, 2009 at 12:34:40 PM

It doesn't f*cking matter that's the charm of the Bond series. You know how its going to end but it's still enjoyable to watch, because of the characters, the women, the gadgets, the humor. It's never lost its charm. So your comment on "OH THE STORY" is null point. Teens aren't the only thing keeping Bond alive don't be delusional. It's the most successful film franchise ever its not just "pimpled teens" keeping it alive.
Armpit writes:
on September 28th, 2009 at 1:57:58 PM

Look Batman, if you're gonna come back to the table - bring something, heh? The core fans of James Boned are kids. Of course there are some 78 years paraplegic old pussies too. It's like that everywhere in everything. There's always the oddball.
Worse than piracy, Bond crashed because they took forever to adapt him to the times. "Oh James" (touches the arm of the girl and she has an orgasm) went out of style in the 70s and it took them over 30 years to change it. Personally I think that Bond and MGM will survive - or be sold but, if they'd done something like they're doing now - they wouldn't be in that predicament.
PhantomCloneInX writes:
on September 28th, 2009 at 7:25:43 PM

I wonder how much of an effect this will actually have on the Bond franchise, since EON Productions is the one who's technically in charge of the series. MGM is just one of the producers/distributors--just like United Artists used to be.

Anyway, I hope this gets sorted out soon. Casino Royale was awesome, and Quantum of Solace was decent. I wanna see where Daniel Craig's 007 is going next. Definitely the best actor to portray Bond since Connery, and the closest to Fleming's original spy.
TH3D4RKKN1GH7 writes:
on September 28th, 2009 at 7:29:19 PM

Yeah you're wrong. A franchise that's been around for 40 years wouldn't have fans above 19. No of course not. No sense in debating with you if you're going to be foolish. A franchise in consistently bringing in 300+ million is in trouble. Complete madness.
Armpit writes:
on September 29th, 2009 at 9:18:30 AM

I would really, really like to know your age batman.
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