Gary Barber and MGM have officially parted ways in a resolution between the two parties that has MGM Holdings paying out $260M to its former chairman/CEO of eight years. This comes only three months after Barber was ousted from the company in a firing that shocked employees and the town. The moves comes after both MSNBC and Reuters reported in the past month that Barber was trying to make a run at the studio and had been meeting with investments bankers to do so.
The company said in a statement posted today, that “it will purchase Mr. Barber’s remaining equity stake in MGM for $260 million, which included 274,392 shares of common stock and 3,883,529 stock options, which were equivalent to 2,302,572 shares of common stock on a net basis …. the transaction will be funded by a combination of MGM’s cash on hand and utilization of its credit.”
Under the agreement, Barber pledged not to engage with MGM for three years, which would preclude an acquisition.
Barber could not be reached for comment at presstime. MGM has been valued at around $4.3 billion (that included debt), so it stood to reason that Barber walked away with a considerable sum after building MGM into the company it is now.
Barber was fired in March with four years left on his contract (in October of last year, the board extended Barber’s contract to Dec. 2022). The executive was well-loved by his employees and the company had turned around from bankruptcy so the firing was entirely unexpected.
At issue was what was best as a long-term play for the company and a difference of opinion between Kevin Ulrich, chairman of the board of directors, the board and Barber. Ulrich did not want a sale and Barber thought it would be good to entertain offers for one. However, Ulrich’s New York investment firm Anchorage Capital Group is the largest owner of MGM with a 34% stake, which came when their debt was turned to equity during the 2010 bankruptcy.
Earlier this week, Moody’s Investor Service downgraded MGM on two key ratings due to the company’s increased spending on film and TV projects. it cited concerns on MGM’s expanded debt load after increasing its revolving credit facility to $1.6 billion, up from $1 billion (that comes due in 2023), plus it has term loans of $400M and $500M due in 2025 and 2026.
Barber had come into MGM while the company was struggling to get out of bankruptcy and served as its CEO for almost a decade while working to build the studio to a going concern.
Some of the deals Barber credited with? Delivering the box office bonanza The Hobbit series, restoring the crown jewel IP of James Bond and maintaining strong relationships with title holders Barbara Broccoli and Michael Wilson, helping forge the Sony deal with such titles as 21 Jump Street, and Bond, and hiring Steve Stark as President, Television Production and Development to develop scripted series that produced Vikings on A&E, Fargo on FX and The Handmaid’s Tale on Hulu which were all highly successful and critically acclaimed.
In addition, under his leadership, MGM took hold of 100% of United Artists, bought the 45% stake the studio didn’t own in its United Artists Media Group joint venture from partners Mark Burnett, Roma Downey, and Hearst, and put Burnett in charge of the MGM Television and Digital Group. He also lead the charge in buying out Lionsgate and Viacom’s share of Epix for $1.2 billion, which translated to MGM’s carrying the debt.
On a side note, one of the films greenlit during Barber’s stint was Creed which was writer/director Ryan Coogler’s first film after his impactful indie Fruitvale Station. Creed earned Slyvester Stallone an Oscar nomination and also helped to launch Coogler’s Hollywood career. Coogler went on to direct Black Panther which smashed records as it quickly rose to become the No. 3 film of all time domestically ($699.4M) and No. 9 worldwide with a $1.34B box office take.
The question now is what will Barber do next and the executive isn’t talking. There are numerous scenarios being talked about around town but none of them include retirement.