MGM’s Cash Woes Imperils ‘The Hobbit’
Deadline Hollywood’s Nikki Finke broke the news that MGM is having severe cash flow issues and may have trouble financing eagerly awaited films starting with The Hobbit two-picture project along with the next installment in the revitalized James Bond franchise.
MGM execs held a conference call with their lenders and admitted this year’s releases missed their targets and left them short of operating capital. “The implication was that it’s teetering on bankruptcy,” one source told Finke. The studio reportedly stuck its hand out and begged for $20 million just to cover immediate needs plus the $150 million they budgeted for the Guillermo del Toro-directed adaptation of the J.R.R. Tolkien novel.
The call, she reported, did not go well. As a result, the equity holders have seemingly given up on the studio with bondholders suspecting the studio is overvalued given their poor track record and management. Bankruptcy is a possibility but no one wants to see the once venerable studio go under or lose valuable rights, such as Bond.
Should the unthinkable actually occur, studios are poised to swoop in and fund the existing projects. Pre-production continues Down Under with full casting for The Hobbit expected in the coming months. The next Bond film is also in the works with a 2011 release being eyed.