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THE CUTTING EDGE

Morgan Creek Gains Partner in MGM Bid

Studios: Investment banker Ackerman joins forces with production firm. Bidders are lured by a library of about 1,600 films.

July 01, 1996|MARTHA GROVES and CLAUDIA ELLER | TIMES STAFF WRITERS

Narrowing slightly the field of bidders for the venerable Metro-Goldwyn-Mayer studio, producer James G. Robinson's Morgan Creek plans to team up with Peter Ackerman, a former Michael Milken associate who now heads his own investment firm, according to a source familiar with the arrangement.

Such a union would strengthen their hand in an auction that has drawn bids estimated up to $1.3 billion. However, they would still face formidable competition from Rupert Murdoch's News Corp. and entertainment giant Polygram, which submitted its official bid just on Thursday.

Sources have put Polygram's all-cash offer at between $1 billion and $1.3 billion. The bid of News Corp., owner of the 20th Century Fox film studio, is purportedly $1 billion, also in cash.

Other interested parties are the current MGM management, led by Frank Mancuso, and producer Arnon Milchan's New Regency, although his interest is said to have flagged.

Washington-based Ackerman, who had been making an independent bid for MGM, was a crack junk-bond salesman at Drexel Burnham Lambert's Beverly Hills office in the 1980s heyday of leveraged buyouts. He would provide financing but apparently would not take an active role in running the studio.

Beside Ackerman, other partners in the Morgan Creek offer are Korean industrial giant Daewoo and Fujisankei Communications of Japan.

Bidders have been lured by the MGM/UA library of about 1,600 films, which could be exploited and sold as packages. Titles include the series of Rocky and James Bond films, "Annie Hall," "Raging Bull," "West Side Story" and "Thelma and Louise."

Once Hollywood's leading studio, MGM turned out such films as "The Wizard of Oz," "Ben-Hur" and a battery of Gene Kelly musicals. In 1986, Turner Broadcasting System bought the studio's library of classic films from owner Kirk Kerkorian, who later sold the studio operation to Italian financier Giancarlo Parretti. The company's historic lot in Culver City was also sold off and today houses Sony Pictures Entertainment.

After Parretti defaulted on his loans in 1992, the studio was seized by Credit Lyonnais. Last year, the French bank company shunted the studio off into a new holding company, Consortium de Realisation, charged with unloading billions of dollars of the bank's assets.

Despite several rough years, MGM has recently had a number of box-office hits, including "The Birdcage," "GoldenEye" and "Get Shorty." Even so, most Hollywood executives involved with the bidding process said they found it wishful thinking on the bank's part to anticipate that the property would fetch at least $1.5 billion.

No schedule has been announced for when a decision will be reached. Under U.S. banking laws, Credit Lyonnais' Consortium de Realisation must sell its controlling stake in MGM by May 1997. Lazard Freres & Co., a New York-based investment bank, is handling the sale.

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