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MGM planning prepackaged bankruptcy, Spyglass takeover

Sunday - October 10, 2010
Category: GENERAL

We generally tend to pass over the news on MGM‘s financial machinations, but this month there is some big news on the future of the company that owns the Stargate franchise.  Since it is bound to stir questions among Stargate fans (not to mention fans of James Bond and The Hobbit, as both film franchises are waiting on MGM’s ability to pay for them), we wanted to let you know what’s up.

The historic studio is more than $4 billion in debt, and its production slate has come to a grinding halt over the past year.  With its creditors granting extension after extension on MGM’s loan payments, the plan at the start of 2010 was to find another company to buy them out.  So MGM solicited bids (it has Bond, Stargate, and a highly coveted 4,000+ title film library), but nothing came anywhere close to what they were hoping to get.

Rather than be forced by its creditors into a type of bankruptcy that could bring an end to the 86-year-old studio, resulting in all of its assets being sold off and creditors walking away with pennies on the dollar, they’ll vote this month on a plan to enter a prepackaged Chapter 11 bankruptcy.  This means that the studio and those to whom it owes money will go before a judge with a plan for payment and reorganization in hand.

The Plan

If approved by creditors, MGM would enter bankruptcy and (if approved by the judge) emerge with Spyglass Entertainment‘s Gary Barber and Roger Birnbaum as its new co-chairmen and CEOs.  This effectively puts Spyglass in charge of MGM, though the studio would continue to operate as an independent entity.  Spyglass was founded in 1998 by Barber and Birnbaum, and has produced or co-produced many notable films (recently 2009’s Star Trek, G.I. Joe: The Rise of Cobra, and Invictus).

MGM’s creditors will emerge as owners of a little over 95 percent of the studio.  Spyglass will own the remainder, divided between the main company and a pair of its subsidiaries — Cypress Entertainment Group, Inc. and Garoge, Inc. — that will merge with MGM as part of the restructured company.

What’s not clear yet is whether MGM will retain its distribution and marketing departments, or be stripped down to purely a production studio (and, presumably, let Spyglass take over those other areas).

What Does It Mean for Stargate?

Having a show like Stargate Universe in active development is actually one of the few bright spots on the MGM ledger right now. SGU has the benefit of Syfy Channel as a co-financer, since MGM charges the network a licensing fee that covers a great deal of the production costs.  Syfy is committed to 20 episodes for Season Two, which wraps principal photography in November.

The studio also earns money from licensing the show to networks in other countries; from Blu-ray and DVD sales; from local channels who pay to air SGU and Atlantis in syndication; from iTunes and downloads; and from its deal with

The question of whether Universe will be renewed for a third season rests entirely with Syfy.  MGM, of course, would like to see it continue.  Syfy’s decision is based first on ratings, since it doesn’t make any of its money from those other revenue streams — which is why, unfortunately, online sales and ratings in other countries don’t affect the renewal decision.  (Expect that news in December, after the first half of the season has aired.)

How Long Will This Take?

MGM has not filed for bankruptcy yet.  Creditors have until October 22 to vote on the plan.  Assuming the plan is approved the bankruptcy filing could happen by the end of the month.  Barber and Birnbaum won’t take over until the studio exits bankruptcy and is officially ready to move forward, hopefully sometime in the first half of 2011.

In the meantime, MGM says that its employees and vendors will continue to be paid and the studio will operate business-as-usual.

Read more about this story at Deadline Hollywood.

Darren created GateWorld in 1999, and today is the owner and managing editor. He lives in the Seattle area with his wife and three children. (More)

COMMENTS (27):Rules | Report Comment | Trackback

  • they should use the later half of the season to end it. 10 episodes is plenty of time. because i cant see things going well for stargate after this season ends.

  • Nothing good right now. The decision to green-light those movies rests with MGM and with their situation right now it’s unlikely.

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  • I suppose the plus side could be that, with their financial situation kind of settled, they may see merit in producing the SGA and SG1 movies as a quick and relatively cheap revenue generator. Only danger of this is that they’ll do the movies on the cheap and they’ll be crap!

  • Darren

    I do think this is good news for those of us holding out hope for the movies. It shows that, after a very long wait, there is finally light at the end of the tunnel.

    (The next big step, after MGM is back on its feet and ready to finance new projects again, is for them to crunch the numbers with a release plan that makes the movies actually look profitable.)

  • Im more interested in saving SGU than the movies. SG-1 and SGA already have finished their run, what we can do now is focus on SGU which is now the heart of the stargate franchise.

  • Is it possible to hear the decision before December based on the ratings?

  • thank you, darren, for your imput. i now have more optimism for the movies actually happening than i have in quite a while!! :D

  • Stargate Universe needs a ratings boost. Unfortunately, I never got word when it started and thus have been watching it on DVR or hulu. I’m in a better position to watch since I no longer work nights.

    But I thought there were special TVs equipped with Nielsen Set meters were the only way they determine how many watch. So how is it important for me to watch if I don’t have that Nielsen device?

    I think if SGU ratings improve, then any movies of Stargate brand are cheaper than any other property. But I don’t know what the ratio between cost and earnings are on each of MGM’s property.

  • usually the people who have Nielsen monitoring them are the uneducated lower class who prefer lackluster TV shows. Only very few who are actually not part of that demo — those few rather watch NCIS.

  • That’s why I wish there was another way for those who do watch it live, to have their view counted. I’d vote every week that I watched the episode in some sorta poll on

  • If every person in China donated 7 Yuan/4 Dollars, we’d have the franchise in the bag.

  • @amagoul:

    “Do you know what this means for the SG-1 and Atlantis movies?”

    That they’re probably not going to be made. Remember that whole Propworx thing? Yeah….

  • So there’s still hope for the movies? Glad to hear that, fingers crossed….

  • Our beloved SG teams aren’t getting any younger so I hope this helps to breathe new life into the movies once the dust settles.

    If the “direct to dvd” market is so stagnant right now as Wright has said, what about doing a ~6 “episode” story arc and market it as a boxset as opposed to a movie? Either way, Stargate fans are going to buy it and anyone actually new to Stargate will be going after the series’ boxsets, not the new movie ones (until later). So I really don’t think they should be as worried about the dvd market right now.

    And of course as others have mentioned, I’d be happy to pay via some sort of web-based delivery system. us ‘Gaters are generally a techy bunch and could get on board with that I think.

  • With the track record so far on ratings and a few episodes still in production I would think it would be best for the studio to just come up with an ending. The beancounters would be rid of it during the financial transition and TPTB could take a year off, re-organize and evaluate just where it went so wrong.

    In short, just find the ascension room on the ship and be done with the whole lot in episode 20. Then go to the conventions and the like and ask the fans for their input on a new series for 2 years from now. I don’t see they have many options otherwise.

  • Seeing as Comcast has its hands on NBC Universal, if the liquidity is there, MGM makes so much sense. The James Bond library for Video OnDemand, low cost content distribution through XFINITY, and an additional revenue stream through two film studios would give Comcast a great return on its move into the content creation business. And only taking on $4 billion in debt, it’s a steal.

  • if SGU get’s a third season, the writers should bring Tom Welling

  • the hobbit is mgm? no wonder its takeing it so long to come out, if they could only finish it that would make them alot of money im shure. the last bond movie was crap that cant be helping them

  • why does everyone either hate or love SGU? i like it ok, though im inclined to agree with the older fans in that i prefur SG1 and SGA. if i had to choose ide like to see the ever elusive movies then a season 3, but ide like to see both

    oh yeah the worst seen ever in any stargate episode was when eli and chloe was in that club with that girl singing. oh god please never again, that made me want to shoot the screen out

  • I would say that 90% of people’s comments are that SGU is less enjoyable than SG-1 and SGA, they should have just kept the SGA series going. I enjoyed it much more than SGU.

  • Even if MGM rises out of the ashes with Spyglass as the owner, there is no guarantee that the new owner will at all be interested in continuing the Stargate as series or direct-to-DVD movies.
    To me the future of the SG1 and SGA movies is still uncertain as ever if not even more.

    This Plan B, that Wright has in mind, better come to fruition fast, or we can start saying goodbyes to hopes of ever seeing them.

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