Harry Sloan out as CEO of MGM
Operations to be handled by trio of execsThe head Lion keeper has been ousted from his corner-office lair.
Harry Sloan has given up the CEO post at MGM, remaining chairman of the company while handing chief operational oversight to a trio of execs. Motion picture group chair Mary Parent, CFO Bedi Singh and newly appointed turnaround consultant Stephen Cooper jointly will execute the chief exec duties, the Century City-based studio said Tuesday.
The move underscores the intensity of the pressure being applied by about 150 MGM lenders, who were demanding that its current owners acknowledge the inevitable and dramatically restructure its finances and ownership structure. Cooper -- co-founder of the Zolfo Cooper consultancy that worked on the Enron bankruptcy and a Krispy Kreme Doughnuts restructuring -- also was named MGM vice chairman.
A well-placed source said Sloan learned of the plan to replace him with an Office of the CEO committee on Monday night. That was only after MGM equity holders including Providence Equity and TPG hired Cooper, considered pre-eminent in the turnaround field.
Even MGM consultant Moehlis and Co. wasn't alerted in advance.
"This guy changes the whole game plan," a lender-side source said. "They are bringing in a very high-powered guy to figure out how to restructure this thing appropriately."
Here's what could emerge during the coming months:
> MGM's recently dormant film distribution operations may be closed eventually.
> Film production of a half-dozen greenlighted movies will continue by dipping into tills of the studio's United Artists division and leaning heavily on production partners likely to secure distribution rights in the bargain.
> Major studios and even deep-pocketed indies will be contacted in an effort to bring in additional management and equity resources.
Warner Bros. and Lionsgate are being discussed as potential MGM partners, presumably coming aboard via either cash- or stock-based transactions. Moehlis -- which has been searching unsuccessfully for months for additional MGM capital -- also has approached smaller players including Spyglass Entertainment, which enjoys a robust relationship with entertainment lender Deutsche Banc.
MGM spokeswoman Susan Arons said the exec troika will remain in place for the foreseeable future, combining skill sets of individuals with three distinct mandates.
"Mary Parent's making movies," Arons said. "Stephen Cooper's role at MGM is to strengthen the capital structure, and the CFO's role is to bridge the two."
Cooper couldn't be handed the CEO reins solo because of his inexperience with film and television.
An accomplished entertainment veteran hired four years ago by MGM's current owners, Sloan touted "important progress building MGM's operations" during his tenure. He signed a new three-year contract last August.
"MGM can now draw from the excellent team we have assembled and attract top talent such as Steve Cooper to help lead the company through its next phase," Sloan said. "As an investor, I firmly believe that the team will work to bolster MGM's operational and financial strengths during this challenging macroenvironment."
In addition to Providence and TPG -- which hold stakes of 29% and 21%, respectively -- MGM's other major equity holders include Sony (20%), Comcast (20%), DLJ Merchant Banking (7%) and Quadrangle Group (3%). None seems likely to hold its position indefinitely, though Comcast or to a lesser extent Sony arguably could see merit in maintaining or even sizing up its interests if the others sell out as cheaply as appears probable.
Most observers expect that whatever restructuring eventually emerges will play out without court supervision. Yet if the parties end up squabbling, things still could slip into a Chapter 11 bankruptcy.