Peter Bart: A Resurgent MGM Builds Clout For New Film & TV Acquisitions
Once the noisiest studio in town, MGM has become the quietest, but also — to the surprise of many — one of the most consistently profitable. As such, it reflects the personality of its CEO, Gary Barber, a modest South African who believes that CEOs should be seen but not heard — well, not seen too much either. In its own quiet way, MGM produces 5-7 movies a year, has 14 TV shows on the air, has earned a profit of $124 million in its first quarter, and is positioned to make some intriguing acquisitions in the coming year.
So where is Barber taking MGM? Will the major mini become a major major? Executives at rival studios think MGM might re-enter the distribution business next year with the next James Bond film, but this is still speculation. A merger with another major — Paramount or Lionsgate are prospects — is now feasible given MGM’s weight in TV as well as film. Then there’s always the mega-plan: the Amazons and Apples are always hovering. At this point, the possibilities exist, but the decisions haven’t been made.
Still, all this suggests some formidable achievements for a company that five years ago was mired in more than $5 billion in debt and that many in the industry had considered comatose.
To be sure, Barber disdains interviews and doesn’t like to give speeches about these prospects. Arriving in the U.S. 34 years ago, Barber started as a $27,000-a-year Price Waterhouse accountant. Today, in addition to running MGM (some say micro-managing it), Barber also devotes abundant time to his hobby, owning some 100 race horses and wagering generously on them — a contrast to his risk-averse behavior as a corporate CEO.
Talk to those who do business with Barber, and the picture emerges of an intense workaholic and a gifted financial engineer who also pores over scripts every weekend and religiously sees at least two movies a week, preferring to buy tickets at movie theaters rather than attend industry screenings. “He is a movie fanatic, but disguises it behind a blizzard of financial data he will toss at you if given the opportunity,” remarks the executive of a distribution company that does business with Barber.
Though he avoids the press, Barber is far from the near-recluse of a previous MGM owner, the legendary Kirk Kerkorian. In fact he is talkative and amicable at select industry events and counts several other industry CEOs among his friends.
Barber’s major news-making event this year was his acquisition from Hearst of a controlling stake in Mark Burnett’s company, with Burnett becoming president of MGM Television and Digital. Sources say Barber broached the deal by offering Burnett the producing credit on the remake of Ben-Hur — a deal that gave Burnett a major brand to produce while MGM gained Burnett’s expertise in the faith-based market. Roma Downey, Burnett’s wife, will also produce a series of faith-based projects for MGM, reflecting the couple’s favored passion.
Full disclosure: I have a history with MGM, having served as a Senior VP of MGM and president of United Artists and also having written a book, Fade Out, about the studio and its enigmatic proprietor, Kerkorian. The book chronicled Kerkorian’s financial prowess in buying and selling the studio time and again, usually at a formidable profit. Kerkorian, like Barber, declined on-the-record interviews but cooperated generously on my book. But while Kerkorian was willing to bet the farm on a succession of free-spending regimes headed by the likes of David Begelman and Frank Yablans, Barber has been cautious about his executive appointments. His savvy production chief, Jonathan Glickman, has been in place for five years. As CEO, Barber won’t greenlight a film unless he has a financial partner in place that is prepared to co-fund the film, supply P&A expenditures and shape a deal permitting MGM to control most worldwide TV rights.
In its film strategy, MGM is focused on sequels and remakes, fostering such “brands” as Creed, The Pink Panther, The Magnificent Seven, Jump Street, Tomb Raider and Stargate (with Roland Emmerich directing). But there are exceptions: Last weekend MGM and Warner Bros. successfully released Me Before You, a $20 million exercise in counter-programming that may surpass $100 million in worldwide gross. The film, a weepie in the genre, was based on a British novel by Jojo Moyes that had found a wide international readership — an important criterion for Barber. Also on the MGM agenda is a spy movie based on I Am Pilgrim by Terry Hayes, which Matthew Vaughn will direct, and Deeper, an underwater thriller starring Bradley Cooper.
While avoiding public posturing, Barber is clearly proud of MGM’s financial muscle. Having pulled itself out from a fiscal quagmire, MGM’s EBITDA has grown over five years from $215 million to $431 million. After several years of declines, its vaunted, if time-worn, library of 4,000 films is presently yielding increased profits thanks to new digital platforms. At the time of its bankruptcy, it was the library that attracted competitive bids from Warner Bros and Lionsgate plus groups headed by Terry Semel, Peter Chernin and Joe Roth — a contest that saw Barber emerge the surprise winner.
A key resource for MGM, of course, continues to be the Bond franchise, which is in a moment of flux. Daniel Craig may or may not return, say Bond-watchers, and Sam Mendes has withdrawn as its director. And while Barber is tempted to re-establish MGM’s distribution arm to handle the Bond film, he apparently also believes MGM resources may be more profitably focused on acquisitions or other initiatives. Barber is known to have his eyes on other companies, sensing that an era of consolidation is at hand. MGM in the past has itself entertained the idea of an IPO and conceivably could revisit that in the future. As it is, MGM maintains a lean-and-mean image. Its sharply contemporary Beverly Hills headquarters in the space once leased by Ari Emanuel for WME is nonetheless downright austere compared with the grandiose MGM offices of past regimes presided over by Alex Yemenidjian or Harry Sloan. It was Sloan, of course, who fostered the expensive reinvention of UA under the proposed stewardship of Tom Cruise – a short-lived venture that added to MGM’s debt. The UA label is presently dormant, but MGM clearly is going to be around for a long time – an estimable turnaround for a company that once seemed bent on self-destruction.
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