MGM REGAINS VIDEO RIGHTS; $225 MILLION DEAL TO HELP SELL DVDS.
Troubled MGM will pay Warner Bros. $225 million to regain control of video rights to its movies, nearly a decade after they were sold off at a fire-sale price by financier Giancarlo Parretti.
The video rights will revert to MGM in February 2000, 39 months earlier than they would have under the $125 million deal Parretti struck in 1990 to raise money for his ill-fated $1.5 billion buyout of the once-legendary studio.
Analysts believe Warner was able to recoup costs from the deal, which gave it video rights for all MGM films released after 1985, in less than two years. Parretti lost control of the studio in 1992 after defaulting on loans to a French bank, which sold MGM to financier Kirk Kerkorian in 1996 for $1.3 billion.
Monday's agreement means MGM will receive video and DVD revenues from its major 1999 title, ``The World Is Not Enough,'' the 19th James Bond film, and its key 2000 title, ``Birdcage II.'' The Bond titles have traditionally performed well in the ``sell-through'' side of video, according to analyst Arthur Rockwell, a former MGM executive. ``MGM now has more flexibility in leveraging and repackaging its library,'' he said.
In addition to paying $225 million, MGM gives Warner back the video rights to pre-1948 Warner titles and pre-1986 MGM films 15 months early. Ted Turner, now the vice chairman of Warner parent Time Warner Inc., had licensed those rights to MGM following his purchase of MGM's library.
Warner, which will continue to handle MGM's video and DVD product through January, said regaining control of the older titles - including ``Gone With the Wind,'' ``2001,'' ``Casablanca,'' ``The Maltese Falcon'' and ``The Wizard of Oz'' - will enable it to maximize their value in the explosive DVD market.
Wall Street, which has been unimpressed with Kerkorian's ownership of MGM, knocked 6 percent off the stock Monday as it dropped 69.75 cents to $11.0625.
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|Publication:||Daily News (Los Angeles, CA)|
|Date:||Mar 16, 1999|
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