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MGM Ends Talks to Buy PolyGram Unit

October 13, 1998|CLAUDIA ELLER

Las Vegas billionaire Kirk Kerkorian has walked away from the poker table. At least for the time being.

Over the weekend, the owner of Metro-Goldwyn-Mayer Inc. terminated talks with Seagram Co. to buy the movie library of PolyGram Filmed Entertainment.

Negotiations collapsed at 9 p.m. Sunday, after the parties failed to agree on the price and structure of the deal, sources said.

Kerkorian had originally offered $300 million to acquire the 1,500-title catalog, which includes such hits as "Four Weddings and a Funeral," "Fargo" and "Bean." Last week he was prepared to sweeten his bid to $400 million, and by Friday afternoon sources said a deal was close at hand.

Kerkorian had planned to turn around and sell the ITC Entertainment portion of the library, which includes 350 film titles and about 9,000 hours of TV programming, to Britain's Carlton Communications for $100 million. In early 1995, PolyGram paid $156 million for the library, which includes such film features as "On Golden Pond," "Sophie's Choice" and "The Big Easy" but is primarily loaded with TV shows that include "The Saint," "Thunderbirds," "The Adventures of Robin Hood" and the miniseries "Jesus of Nazareth."

But sources said that when Santa Monica-based MGM received additional financial information that there were more liabilities in the ITC portion of the catalog than expected, Kerkorian proposed restructuring the deal to exclude the ITC catalog, lowering his offer to just under $300 million.

Seagram would rather sell the library as a package.

Sources said that by Sunday night, Kerkorian and MGM Chairman Frank Mancuso grew frustrated and decided to walk away from the bargaining table.

An MGM spokesperson declined to discuss the matter other than to say, "We didn't like their terms and they didn't like ours."

Seagram had no comment.

While sources on both sides doubted the talks would be revived, none were willing to rule it out.

"You have an eager seller and an interested buyer," said one person close to the situation. "So no one would be surprised to see this revived."

A source from the other side of the table said: "Never say never. It could die or resurrect."

While Seagram doesn't want to piecemeal out the library, it may have no other option. It already tried to sell PolyGram Filmed Entertainment in its entirety and couldn't get the price it wanted. Seagram chief Edgar Bronfman Jr. put the movie company up for sale in May in hopes of getting a billion dollars or so to help defray the cost of acquiring its parent company, PolyGram, for $10.4 billion.

But Seagram received only three offers, and only one--a conditional joint bid from France's TV giant Canal Plus and Artisan Entertainment--was for the whole company. Seagram decided to switch strategies and try to sell assets individually and absorb what's left.

Carlton had bid strictly for the PolyGram library, and Seagram could cut a deal with Carlton for the ITC portion, which is heavily weighted with British TV programming, while reopening negotiations with MGM for the bulk of the catalog.

Kerkorian's bird-in-the-hand, all-cash offer may be too attractive for Seagram to turn away if it can unload the remainder of the library.

New Marketing Chief at Disney Expected

Chris Pula is expected to be named president of movie marketing at Walt Disney Co., replacing John Cywinski, sources confirmed.

Pula, who was fired as head of marketing at Warner Bros. in December after less than a year on the job, has been quietly working behind the scenes as a consultant to Disney on selected movie projects, including "Mighty Joe Young," "Beloved," "Six Days, Seven Nights," "The Horse Whisperer" and "Armageddon."

Pula's relationship with Disney Studios Chairman Joe Roth goes back to the late 1980s and early '90s when the two worked together at 20th Century Fox.

Disney and Pula have yet to negotiate a deal but are expected to do so soon. While Disney officials declined to comment Monday, sources said Pula will probably join the studio by the end of the year and report directly to Richard Cook, chairman of Walt Disney Motion Pictures Group.

Cywinski has been Disney's marketing chief for the last three years. He was plucked by Cook from Burger King, where he was vice president of U.S. marketing and had worked closely with Disney on promotional tie-ins with its animated films, including "The Lion King."

Sources said Cywinski's lack of experience in movie marketing proved difficult to overcome.

"It's hard to come into one of these major jobs without the background," one source said. "Some people adjust and some don't. It was probably just bad casting."

Still, it's not uncommon for Hollywood studios to reach outside the movie business for marketing executives. Disney had a successful run with its former marketing chief Bob Levin, who came from a major advertising firm. And Warner Bros. recently hired Brad Ball from McDonald's to replace Pula.

Some in Hollywood will unoubtedly be bewildered by the odd-couple casting of Pula and Disney.

While he is widely respected throughout the industry for his innovative marketing campaigns, Pula is not exactly known for being a corporate animal. His flamboyant and outspoken style fit in well at scrappy New Line Cinema, where he had a successful four-year run as head of marketing with such hits as "The Mask," "Dumb and Dumber" and "Mortal Kombat," but his style got him in trouble at the more button-down, conservative work environment at Warner Bros.

Because of its family brand name, Disney is probably the most conventional of all the studios. Then again, Disney surprised many in Hollywood four years ago when it bought independent film company Miramax Films, run by the very unconventional Weinstein brothers.

Pula began his career in broadcasting at CNN in Atlanta as part of the cable network's start-up team. He also spent five years as an account executive and creative supervisor at Grey Entertainment & Media in New York.


Freelance writer Judy Brennan contributed to this report.

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