The ongoing attempts to sell MGM and Miramax Films highlight the steep decline in the valuation of libraries but consumers are also feeling the cheapening of the product.
These are strange times for movies. News broke this week that Eon Productions has cancelled further development of the 23rd James Bond film starring Daniel Craig due to the stasis in the sale of beleagured rights-holder Metro-Goldwyn-Mayer (MGM). The film, which had talent like Sam Mendes and Peter Morgan involved, would have continued the story from Quantum Of Solace which grossed $586m worldwide in 2008/9.
You can’t keep a gigantic production like Bond 23 pending indefinitely. Mendes has already moved on to his film of Ian McEwan’s On Chesil Beach, and Craig, who, like Sean Connery, has an A-list career outside 007, is juggling movies. He’s wrapped the first Tintin film for Steven Spielberg and Peter Jackson, is shooting Cowboys And Aliens for Jon Favreau and is rumoured to be taking the key role of Mikeael Blomkvist in David Fincher’s The Girl With The Dragon Tattoo. Craig has slots to fill and jobs to book and he can’t hang around on the offchance the MGM situation might be resolved.
Bond 23 as it currently stands is not the only casualty of the MGM situation. Guillermo Del Toro last month stepped away from further involvement developing The Hobbit after two years of work on the film. A director of his calibre couldn’t stick around waiting either.
The MGM situation parallels the stormy corporate dramas surrounding other library-based companies Lionsgate, which is battling lead shareholder Carl Icaahn from a hostile takeover bid, and Miramax Films, which is being sold by Disney and being pursued by a number of bidders including the Weinstein brothers and David Bergstein. Each situation is proving so troubling because of the valuation of the libraries on which these companies have been built. Yes, MGM has Bond and The Hobbit, yes Lionsgate has Saw and Tyler Perry, but their libraries of thousands of films are not worth what they once were.
MGM was bought by a consortium including Sony Pictures in 2005 for $5bn and the best offer it could get in 2010 was $1.5bn from Warner Bros; Disney is asking $700m for Miramax’s 700-film library and it killed a deal with the Weinsteins and Ron Burkle when their asking price dropped to $565m. Talks are ongoing with the controversial Bergstein and Ron Tutor for a figure rumoured at some $650m. Icahn meanwhile believes that libraries should not be the focus of Lionsgate’s business - namely in a proposed purchase of or merger with MGM – and that the company should focus on film and TV distribution.
Conventional wisdom has it that film libraries are the bedrock of the business, but the decline in DVD and TV sales has dramatically reduced their value, a problem for all the Hollywood studios whose vast catalogues are the base of their financial strength.
The library problem is just another new reality in a business still searching for a new window or major influx of revenues. My feeling is that the DVD crisis itself has devalued film in general. It’s no secret that many youngsters believe they should have their films for free these days, but wandering through the flagship HMV store on Oxford Street in London this week, I felt films were being undervalued in general. Prices were starting at $3.50 or $4 for some of the biggest titles in the last year. Movies that 12 months ago were being carefully prepped by theatrical marketers were now retailing for $7 or less. It may be a necessity for the retail business to shift units, but these deals imply that the medium itself is being cheapened by its own industry. Once consumers sense that, why should they pay more in the future?