Hunt for MGM CEO hits snag

Wed Jun 16, 2010 1:13am EDT
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By Carl DiOrio

LOS ANGELES (Hollywood Reporter) - MGM's parade of CEO candidates seems to have marched down a blind alley.

Former Viacom executive Jonathan Dolgen, and Fox veterans Peter Chernin and Bill Mechanic have made it clear they have no interest in taking the reins at the ailing studio despite urgings from lenders and the prospect of a recapitalized new ownership structure.

At the same time, lenders have been unable to work up much enthusiasm for others interviewed as prospective new CEOs.

Well-regarded executives at indie labels Summit and Spyglass have been consulted but failed to convince weary Lion debtholders that their management prowess alone can put the studio back on the path to prosperity.

Burdened by a crushing debt load of almost $4 billion, MGM owners tried unsuccessfully to find a buyer for the studio and now seeks to fashion a financial and management restructuring. The goal: to buy three to four years of solvency in the hope the studio's value will rise in the meantime.

In a bit of good news, investment films Qualia Capital, Anchorage Advisors and others remain interested in sinking $500 million or more into the Lion in exchange for an equity stake. That would get film chief Mary Parent back into action after movie development and releasing was halted because of the studio's woes.

An idea gaining currency in the absence of an obvious candidate would be to keep the "office of the CEO" arrangement that's been in place since Harry Sloan resigned as CEO in August to become non-executive chairman of MGM. Restructuring specialist Stephen Cooper would remain in place longer than planned, with Parent and CFO Bedi Singh maintaining co-CEO roles during a prepackaged bankruptcy to clean up debt.

In the process, studio equity would shift from a current group of owners to MGM lenders and any new equity investors. MGM's ownership consortium includes Providence Equity, TPG Capital, Sony, Comcast, DLJ Merchant and Quadrangle. J.P. Morgan leads a steering committee representing more than 100 MGM debtholders, though consolidation of publicly traded Lion debt in recent months means one-third of the debt now is held by Highland Capital and a handful of other lenders. Lenders holding two-thirds of the studio's debt would have to approve any prepackaged bankruptcy.   Continued...