Billionaire Len Blavatnik is among the second-round suitors for Metro-Goldwyn-Mayer, two people with knowledge of the situation said.
Lions Gate Entertainment, Time Warner, Liberty Media and Elliott Management, working with Hollywood financier Ryan Kavanaugh, also are in the bidding, according to people close to the process who sought anonymity because the discussions are private. They declined to discuss amounts proposed in the nonbinding first round.
Advancing to the second round gives suitors access to more detailed information before making a formal bid for the Los Angeles-based studio, which owns a 4,100-film library and is exploring a sale after failing to make payments on $3.7 billion of debt. Last week, lenders extended a moratorium on interest payments to March 31, allowing more time for negotiations.
“The price has come down so far that it’s attracting nonstudio bidders,” said David Davis, managing partner at the entertainment advisory firm Arpeggio Partners in Santa Monica, California.
Matthew Harrigan, an analyst with Wunderlich Securities, estimated last month that the company is worth $1.6 billion to $1.7 billion. When the studio put itself up for sale in November, MGM creditors sought at least $2 billion, people with knowledge of the situation said at the time.
Blavatnik may be at a disadvantage because he doesn’t own a film distribution business, Davis said in an interview. Studio bidders would likely plan to close MGM’s distribution unit to reduce costs, he said.
“I don’t see how companies that don’t own motion-picture distribution systems can compete on bidding,” he said. “You have big overhead savings.”
Blavatnik’s bid marks an effort by the Ukrainian-born industrialist to expand in the United States. Blavatnik, a U.S. citizen, is chairman of New York-based Access Industries Holdings, which owns a stake in Top Up TV, a British pay television service, and in 2008 acquired control of the British arm of actor/director Mel Gibson’s Icon Productions, the Daily Telegraph reported at the time. Access Industries also bought the rights to broadcast 500 movies, including "Dancing with Wolves" and "The Passion of the Christ."
A spokesman for Blavatnik declined comment, as did Susie Arons, an outside spokeswoman for MGM. Ed Adler, with New York-based Time Warner, and Courtnee Ulrich of Liberty Media also wouldn’t comment.
Blavatnik, 52, was ranked 44th on Forbes magazine’s 2009 list of the 400 richest Americans with a $5 billion fortune made in oil and gas. He emigrated to the United States from the former Soviet Union in 1978 and studied at Columbia University and Harvard Business School before founding Access Industries in 1986, according to the magazine.
In June, Blavatnik offered $33 million in an unsuccessful bid for a stake in Irish broadcaster Setanta Sports, BBC News reported at the time.
MGM Vice Chairman Stephen F. Cooper, who is leading the studio’s restructuring, also serves as supervisory board vice chairman and head of the restructuring committee at LyondellBasell Industries, partly owned by Blavatnik’s Access Industries. The company’s U.S. operation, Lyondell Chemical, filed for bankruptcy protection in January 2009.
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