What are film libraries worth these days?
Who really wants MGM, and what are they willing to pay for it? Six years ago, the Sony-led consortium that bought the Lion overpaid for a library that had already been mined exhaustively. Not that many people were willing to admit it at the time.
Now that the DVD bubble has burst, however, people are taking a closer look at the troubled asset. Drowning in $3.7 billion debt, it is unlikely to draw anywhere near $5 billion it last commanded.
The next round of bids are due tomorrow, with Time Warner apparently still in the hunt. Relativity Media’s hedge fund backer Elliott Associates is apparently out, though it’s not clear to me how interested it was in the buy.
The bigger question is what film libraries are worth these days. The DVD glory days are over, with more people opting to rent rather than buy movies on disc. Video on demand is growing, but still very small.
Will VOD and other movie delivery technologies help make up for DVD declines? The future’s still unclear, the experts admitted at the Film Finance Forum earlier this month. But they also said that companies overreacted to the DVD decline, slashing valuations of individual film earnings too far.
Which leads me back to my original question: What, then, are film libraries worth?