MGM owners on the prowl for Lions den bidders

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Speculation circulates anew over a possible turnover in ownership at MGM.

Two things are stressed by those in the know: The current owners won't sell for substantially less than the $5 billion they paid for the studio just a few years ago, and few suitors will be interested in bidding anywhere near that.

Business Week reported online Friday that the investment consortium controlling MGM had retained Goldman Sachs to solicit purchase offers for the studio. MGM declined comment on the report, and other parties were unavailable.

But though the magazine put the asking price at $5.2 billion, many doubt the studio could fetch even $5 billion, let alone a premium on the consortium's 2004 investment.

Sony has a 20% stake in MGM — investment banks and Comcast hold the balance of equity — and is considered a prime candidate to bid on the remaining interest in the Lion should a formal auction be launched. Lionsgate is considered among other prospective suitors, as the mini-major has consistently sought to bulk up its holdings over recent years.

The Hollywood Reporter reported last week that Reliance Big Entertainment — which is poised to ink a $550 equity investment in a Steven Spielberg-resurrected DreamWorks — considered taking an MGM stake and ultimately passed.

Serial Lion-tamer Kirk Kerkorian is also said to have floated a low-ball bid of $3 billion for the studio, though such a low offer would be risible to an ownership group determined to avoid taking a bath on their pricey foray into Hollywood. Sources in the banking community said execs at Providence Equity Partners and the other private equity firms in the MGM consortium, for now, appear dead set against taking any loss on their investment whatever.

Indeed, a key MGM insider predicted privately on Friday that the studio would be controlled by essentially the same ownership one year from now.

Details were unavailable regarding any formal search process at Goldman Sachs, which advised MGM before its last turnover in owners. But a financial-community insider said no further offers are expected to jell until after Labor Day at the earliest. (partialdiff)
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