Sony expands digital television with a roar.

It is said that Sony's future plans tend to be shown only when its present is secure. And, apparently, Sony is so secure to have put a non-refundable deposit of $150 million to buy one of the largest content libraries in the world.

Indeed, a group led by Sony has reached an agreement to buy MGM for about $4.84 billion.

Sony struck the deal with MGM just 24 hours before MGM had scheduled a board meeting to approve a similar deal with Time Warner. Until that day, MGM management had been expected to greenlight Time Warner's $4.6 billion bid.

Sony's group agreed to pay $12 a share for the studio, which amounts to around $2.94 billion. An additional $1.9 billion would pay off MGM's debt taken on this year to pay stockholders a special $8 a share tax-free dividend. Of the former amount, $2.1 billion would go to 87-year-old Kirk Kerkorian, who has now made his third exit from MGM.

Sony was backed by Texas Pacific Group, Providence Equity Partners and DLJ Merchant Banking Partners and is expected to put up $250 million to $300 million to run the operation. Providence has committed to investing $450 million. Texas Pacific Group will invest about $300 million. DLJ Merchant Banking Partners, a unit of Credit Suisse First Boston, will invest about $250 million. J.P. Morgan Chase will finance the deal with a $4.25 billion loan.

Although Sony is expected to preserve the MGM name in both a movie production label and the home video division, in effect MGM would become the first of Hollywood's "seven sisters" to disappear as a major studio.

The deal will grant Sony a library of 4,100 MGM, UA and Orion titles, which, added to their own, makes the studio amass the biggest library in Hollywood.

This library will give Sony considerable power in its fight to set the format for the next generation of DVDs. The fight is now between the Blu-ray format, backed by Sony, Panasonic, Philips and Sumsung, and the HD DVD format led by Toshiba and NEC.

The expanded Sony library has also attracted Comcast, which has 22 million cable subscribers in the U.S. It agreed to package Sony and MGM content into a number of movie channels and video-on-demand offerings.

Although it became part of the final decision, Comcast did not commit money into the deal, however, at a later date, it is to invest some $300 million into the venture.

Sony is the only studio in the U.S. that doesn't have a major U.S. TV network, therefore the Comcast carriage agreement and its digital TV potential could become its most important strategic move.

Conversely, Sony's TV outlets outside the U.S. are well established as satellite-cable networks and are under Sony Entertainment Television (SET), a division of Sony Pictures TV International. Sony's HBO/Cinemax's investments in Asia, Latin America and Central Europe vary by region but are around 30 percent in Latin America and Central Europe, where the company partners with Warner and Disney. The percentage is lower in Asia because the partnership was expanded to include Paramount and Universal, while Disney has, reportedly, dropped out. Sony's ownership in Star Channel/Japan is less than 30 percent. In Latin America, SET's ownership is about 85 percent, but there are negotiations to buy-out its partners. SET fully owns AXN, the international action network, in Latin America and Central Europe. SET's anime network, Animax, controls services in Japan and South East Asia with plans to expand the brand to other regions.

In the U.S. Sony runs Sony Pictures Digital Entertainment (SPDE), an operating unit of Sony Pictures Entertainment created to develop and deliver the next generation of entertainment. SPDE was formed in 1999 under Yair Landau, consolidating Sony Pictures Image-works, Sony Online Entertainment, and Columbia Tristar Interactive into one division.

Through SPDE, Sony launched in 2002 Movielink, the first major Internet movie download service in partnership with Warner Bros., MGM, Paramount and Universal. Recently, SPDE's digital services platform group was moved over to parent Sony Corp. of America. This new group is now charged with developing the technology used to operate various Internet-based entertainment ventures, such as SonyPictures.com, its comprehensive website; SoapCity, to download commercial-free soap opera episodes; Screenblast, for customizing all digital media; Sony Pictures Mobile and the online promotional arm, Sony Pictures integrated Network, which operates under SPDE to build websites for Sony's film and television group and to develop promotional material for SonyPictures.com. SPDE's other units, including Sony Pictures Imageworks, a full-service shop facility, Sony Pictures Animation and Sony Online Entertainment for games, will remain unaffected.

Nobuyuki Idei, Sony's chairman and CEO, has been talking about digital convergence since 1995, when he first became CEO.

The interesting aspect is that, in Sony's view, television, personal computers, game consoles and hand-held devices will one day be all streaming media. However, Sony needs to develop outlets for its music, films, TV shows and other media content, therefore the MGM library is of vital importance.

It has been pointed out that Sony's first interest is still consumer electronics, but content is becoming increasingly important in order for the company to gain control of the living room.

Reportedly, the only obstacle could be that the content side of the business is worried about piracy and, therefore, is ambivalent about all of Sony's new digital audiovisual devices.