Summit Backs Away from Pursuit of MGM

MGM is still on the market, having put itself up for sale in November. Since then, the studio has released one film: Hot Tub Time Machine, which barely made money. So if you're roughly $4 billion in debt, that's a bad sign. There was a great development in all of this about a month ago, which we'll revisit shortly. But first, Deadline reports that Summit, one of the few remaining film companies looking at MGM, has taken a pass. The reason: "Summit is pulling out because the process has gone on way too long and it's become a distraction for the business." Sounds reasonable. Whatever entity eventually picks up the Lion, and the longer it goes the more I think it's going to be sold in chunks, with one studio paying for the catalog of thousands of films, another one taking the plunge on its in-development projects, wth an eye on debt restructuring between the two. But Summit joins Lionsgate and apparently Warner Bros. as studios that have looked over the financials and couldn't make it work. The creditors are being about as flexible as you can imagine, willing to take far less than the debt amount, or somewhere between $1.5 and $2 billion. Summit, meanwhile, is only withdrawing from this arrangement and is still looking to acquire other opportunities in the film and TV library game, which can be very lucrative over the long-term. It's actually the only reason to consider buying MGM. Back in August, Spyglass Entertainment formulated an offer, and I think it's the best one I've heard for this mess. The guys who run one of Hollywood's most prolific production houses would take over MGM, which would give the studio a lot of properties moving forward that it doesn't have to pay to produce. The creditors would wipe out the debt, and in return, the Spyglass management would take on a 4% share of the company, meaning when MGM finally makes money, almost all of that goes to the creditors. Making money won't be difficult with James Bond and two Hobbit movies. Those alone would account for most of the debt. But this is a way to get there without handing over so much money at once.