Can ‘The Hobbit’ Wait For MGM Decisions?

MgmlogosmallEXCLUSIVE: Now that Spyglass has emerged as the favorite to steer MGM’s future fortunes — although Summit insists it’s not out of the running yet and Lionsgate is in merger talks — more details are emerging about MGM’s possible future. Insiders tell me that the Spyglass plan would transform MGM into a pure production company and close down its marketing and distribution divisions. That would certainly cut costs in the short run. Coupled with the equity that Spyglass would bring to the table, a streamlined MGM would lower its debt and have a shot at raising new funding to finance its own pictures. That would let Spyglass partners Gary Barber and Roger Birnbaum do what they do well, which is to lower risk by making domestic and offshore distribution deals.

SpyglassBut I see the downside of this plan. MGM would have to pay others to distribute and market its films — and those fees could be comparable or higher than the monies saved on overhead. I’m told that rival Summit and Lionsgate proposals would maintain MGM as a studio because both companies have distribution divisions. The Spyglass move would mean yet another morphing of MGM over the recent past. Under Harry Sloan, the revived studio started off as a distribution rental system for films by financiers like Sidney Kimmel and The Weinstein Co, a strategy that didn’t work. Then it had a short-lived stint as a production-distribution and marketing company under Mary Parent and Michael Vollman, with Tom Cruise and Paula Wagner running United Artists with a planned $500 million Merrill Lynch revolving fund. Well, UA didn’t make enough movies to keep that money rolling, and insiders say it dried up and went by the wayside.

So what’s happened to MGM’s slate? It halted when the recession hit and the credit noose tightened. The regime’s first effort was Hot Tub Time Machine, followed by the Kevin James film The Zookeeper. The latter film was reassigned to MGM’s partner on the picture, Sony, which promptly moved it to a high-profile Summer 2011 slot after the film tested well. A remake of Red Dawn and The Cabin in the Woods, written by Joss Whedon and Drew Goddard who’s directing, are in flux. The rest of the slate stays frozen, including The Three Stooges, Robert Ludlum’s The Matarese Circle, a Robocop reboot, and others.