Decision week for MGM chain
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Your support makes all the difference.A buyer for the MGM cinema chain, worth between £150m and £200m, will be announced by the end of this week, according to sources close to the sale talks.
SG Warburg, which is handling the disposal on behalf of Crdit Lyonnais, the troubled French bank, is believed to have a final list of five buyers, including Rank, Time Warner and a consortium grouping Virgin Group, Crdit Suisse-First Boston and Craig Corp,the US cinema chain company known for its development of the drive-in concept in the 1950s.
MGM has 120 cinemas in the UK and Ireland, as well as 18 multiplex operations. It also owns smaller chains in Denmark and Holland. It had revenues of about £100m last year, on box office receipts of £289m.
Two management groups have also mounted bids, insiders said.
One has the backing of investment company Electra, while the other has secured the support of Prudential.
It is also thought that Carlton Communications, reported to be out of the running, may still be considered as a buyer.
Rank, which recently sold 40 per cent of its share in Rank-Xerox, has a war chest of £1.5bn and is looking to invest further in core markets. It is already a large cinema owner through Rank-Odeon, and would be likely to attract the attention of the Monopolies and Mergers Commission if its bid for the MGM cinemas was accepted. The company has made contingency plans to sell certain cinemas in areas where it already has a strong presence.
Time Warner might also face scrutiny from the MMC, analysts said. It, along with two other US companies, UCI and National Amusements Inc, controls 34 per cent of the multiplex market in the UK. National Amusements is the holding company of Viacom, Sumner Redstone's giant entertainment conglomerate that owns Paramount Pictures, Blockbuster Video and MTV Networks, the music video, film and children's television group.
The MMC last autumn ruled that restrictive practices in the industry were anti-competitive, and asked for changes in the way films were offered for distribution. The five biggest distributors, Buena Vista (part of Disney), Columbia, Fox, UIP, and Warner are all linked to US studios. They accounted for three-quarters of all revenues from film distribution between 1990 and 1993.
Titans lock horns, page 24
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