Is MGM owner preparing to sell the studio?

Credit Lyonnais, the French bank that took over ownership of Metro-Goldwyn-Mayer Inc. in 1992, has hired investment bank Lazard Freres & Co. LLC to advise it on strategies for the pending sale of the studio.

The move comes as MGM has had two box office hits in as many releases with the John Travolta gangster comedy "Get Shorty" and the most recent James Bond movie, "GoldenEye."

Credit Lyonnais has until May 1997 to divest itself of the studio under U.S. law prohibiting banks from owning non-banking assets. The Paris-based bank took over MGM in 1992 after ousting then-owner Giancarlo Parretti, who CL helped to finance his purchase of MGM.

The Consortium de Realisation - the Credit Lyonnais subsidiary that technically owns MGM - said in a statement that Lazard Freres will "give advice on strategies which might be pursued for the divestiture of CDR's holding in Metro-Goldwyn-Mayer Inc."

"In particular," the statement continued, "Lazard Freres shall make recommendations to CDR as to the appropriate timing and the manner of this divestiture, consistent with CDR's goal to maximize the recoupment of its investment in MGM."

An MGM official downplayed the significance of hiring Lazard Freres, noting the move did not mean a sale of the studio was imminent.

The Consortium de Realisation statement concurred, noting that "no decision has been made on when and under what circumstances the divestiture will occur."

But the move was widely seen as the first step in the ultimate sale of the company - a step that was spurred by MGM's recent box office successes.

"Get Shorty," released in late October, has thus far grossed more than $65 million domestically. "GoldenEye" has grossed more than $70 million domestically, making it the most successful Bond film ever at this early stage of its release.

All of which makes now a good time to start looking at the mandated sale, said Mike Adler, an entertainment attorney with the West Los Angeles law firm of Mitchell, Silberberg & Knupp.

"The studio is starting to do well," he said. "The stock market is hot. This is probably a good time."

Acquired through foreclosure

After foreclosing on Parretti in 1992, Credit Lyonnais then put the studio - and its $800 million in debt - into the Consortium de Realisation and gave MGM an additional $400 million credit line to get back on its feet.

Those efforts included hiring Frank Mancuso as MGM chairman in July 1993, upping the studio's film production slate, reviving its dormant television business and entering the interactive/video game marketplace.

The idea was simple - build the company's value for the day when it eventually must be sold.

Reported selling prices have ranged from $1.5 billion to $2.5 billion. Potential buyers include Polygram NV, National Broadcasting Co. Inc., New World Communications Group and Bertelsmann AG, the German media conglomerate whose U.S. holdings include Arista Records Inc. and Bantam Doubleday Dell Publishing Group Inc.

Lazard Freres is no stranger to selling motion picture studios either. The company, headquartered in New York with a large French presence, oversaw the sale of Paramount Communications Inc. to Viacom Inc. in 1994, and advised Seagram Co. on its purchase of a controlling interest in MCA Inc. earlier this year.

MGM next turns its sights on the remainder of its holiday releases, the most promising of which is "Cutthroat Island," the action film staring Geena Davis and Matthew Modine that opened Dec. 8.

Even as MGM struggled through the lean Parretti years, it has always had value, said Karen Randall, an entertainment attorney and managing partner of the Century City-based law firm Katten Muchin Zavis & Weitzman.

That value grows, however, as the company increases its production and turns out hits.

"The MGM lion is one of the most highly recognized and valuable trademarks in the world," Randall said. "To the extent that the company is replenishing its product, it's value has gone up."