Time Warner may bid for MGM

SONY may have delayed too long in its move for control of film studio Metro-Goldwyn-Mayer, with Time Warner rumoured to be ready to launch a serious bid of its own and MGM suggesting it is looking at other offers.

MGM chief executive Alex Yemenidjian, addressing the company's annual meeting, refused to comment on specific takeover proposals but said the studio was considering new 'strategic alternatives'.

Sony, together with partners Texas Pacific Group and Providence Equity, were in exclusive talks to buy the studio with its 4,000-title film library, but that exclusivity has now expired.

The AGM had been delayed for six weeks while the bid was considered, and news had been expected at the meeting. There was apparently agreement between the Sony group and MGM on price but the deal was delayed as Sony and its partners thrashed out details of their own relationship. Yemenidjian now says more time is needed to explore MGM's other options.

'As it turned out, we have more strategic alternatives available to us than we realised, and we need more time to properly explore all our alternatives,' he told shareholders.

According to insiders, the most likely of those alternatives is a bid by Time Warner, owner of rival studio Warner Bros, although it is understood that any approach is still some time away, and no letter of intent has yet been sent to MGM.

However, if it were to make a bid, observers say that as Time Warner ran the slide rule over MGM only six months ago, it could move very fast, eclipsing the Sony deal. That bid would be likely to fall short of the $5bn Sony is prepared to offer. Warner executives are on the record as saying that is too steep.

On the other hand, MGM is believed to want to bed down a deal by mid-July, and may be prepared to compromise on price.

MGM has some promising movies coming up next year, including a John Travolta film, Be Cool, which is set for release in February, a new Pink Panther movie film with Steve Martin in the summer and another James Bond blockbuster later in the year.

But the glittering prize is the studio's library of films that some analysts value at more than $5bn.

Chief operating officer Chris McGurk said the new movies and library 'underscores why Alex (Yemenidjian) and I are so confident about MGM's future'.