A Sony Corp.-led investor group on Thursday finalized its agreement to purchase Metro-Goldwyn-Mayer Inc. for about $4.9 billion, with one twist: cable giant Comcast Corp. became an equity partner by chipping in $300 million.
Comcast had suggested that it would not put money into the acquisition until sometime in the future. But sources close to the situation said Comcast was simply holding out until company executives were certain that a written deal was in hand.
Comcast, the sources said, did not want to risk once again looking like it was on the losing end of a deal. This year, Comcast's $50-billion takeover bid for Walt Disney Co. was rejected. Last summer, Comcast expressed interest in Vivendi Universal's entertainment assets, which eventually were sold to NBC.
Sony and its financial partners will pay $12 a share to majority owner Kirk Kerkorian, who holds 74%, and other MGM shareholders.
The price includes about $2 billion in debt that the Sony group will inherit, most of that taken on this year when Century City-based MGM paid a special $8-a-share dividend.
In their joint announcement, the Sony group and MGM said the investors had committed $1.6 billion in cash to buy the studio.
The largest chunk, $525 million, will come from Providence Equity Partners, an investment firm with holdings in such entertainment companies as Warner Music Group.
Investor Texas Pacific Group will put up $350 million, with Sony and Comcast each contributing $300 million. DLJ Merchant Banking Partners will invest $125 million. As much as $4.25 billion in debt financing will be arranged by J.P. Morgan Chase & Co. along with Credit Suisse First Boston.
Until the deal clears regulatory scrutiny and closes, which is expected within nine months, MGM will continue to make and market its own films and TV projects under its MGM and United Artists labels.
Once the acquisition is competed, MGM will continue to operate under its historic name, but Sony Pictures Entertainment boss Michael Lynton and movie chief Amy Pascal will oversee the unit. That will mark the end of MGM as a stand-alone studio after 80 years.
Sony will co-finance, co-produce and distribute MGM movies. Sony also will distribute all DVDs from MGM's 4,000-film library, which includes the James Bond films and the Pink Panther franchise.
Within three to five years, Sony is expected to buy out its financial partners with the exception of Comcast.
Sony, Comcast and the equity partners last week forged a separate agreement to create cable channels featuring Sony and MGM movies. The companies also agreed to produce programming and distribute movies through Comcast's video-on-demand systems.
In a statement, Howard Stringer, chief executive of Sony Corp. of America, said the company and its partners "look forward to preserving and enhancing the legendary franchise that is MGM."
MGM Chief Executive Alex Yemenidjian called the deal "a compelling strategic transaction that will give MGM the ideal partners to build on its unique legacy."
Neither side would comment further.