MGM exits Rainbow nets at a loss

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Metro-Goldwyn-Mayer Inc.’s grand ambitions for its investment in cable networks AMC, The Independent
Film Channel and WE: Women’s Entertainment fizzled, leaving the studio selling
the 20% stake back to Cablevision Systems Corp. for $500 million, booking a $93 million
loss.

MGM bought the stake in the entertainment networks of Cablevision’s Rainbow Media Holdings Inc.
unit three years ago for $850 million.

In December, MGM collected $250 million from Cablevision’s sale of Bravo to
NBC, and it has collected some dividends from the other networks.

When the deal was initially cut, Alex Yemenidjian, MGM's chairman and chief
executive, envisioned the investment leading to extensive collaboration between
the studio and the networks and, eventually, full ownership.

But there was nothing like that outlined in the partnership agreement, and
MGM found the investment to be as annoyingly passive as pretty much every media
executive outside of MGM always assumed it would be.

MGM is pursuing the auction of Vivendi Unversal Entertainment, and
Cablevision is supposedly backing a rival bid by Edgar Bronfman Jr., so
Cablevision chairman Chuck Dolan is selling bullets to the enemy,
giving MGM controlling shareholder Kirk Kirkorian more cash to mount a bid.

But an executive at Bronfman’s investor group said, "We’re totally
comfortable" with the Dolan-MGM deal.

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