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overview
This page considers MGM (aka Metro-Goldwyn-Mayer).
It covers -
introduction
MGM epitomised the US studio system as a film factory
under the control of East Coast financiers, integrating
production (with extensive facilities and actors on long-term
contracts) with distribution and large-scale exhibition
interests.
Following dismantling of the studio system it came under
the control of entrepreneur Kirk Kerkorian, with studio
facilities and film libraries being sold, acquired and
resold to figures such as Ted Turner and Australia's Christopher
Skase and Kerry Stokes. The MGM 'brand' and lion logo
was used to decorate casinos, hotels and even an airline.
In September 2004 MGM's acquisition by a Sony-led
consortium was announced 'in principle'.
beginnings
MGM was established in 1924 as Metro-Goldwyn Pictures
through the merger of Metro Pictures, Samuel Goldwyn Picture
Corporation and the Louis B. Mayer Pictures Company.
Metro, founded in 1915, brought together Loew
family production, distribution and exhibition interests.
Until the collapse of the studio system MGM served as
the production arm for the Loews cinema chain, with executives
such as Louis B Mayer and Irving Thalberg reporting to
Loews bosses such as Nicholas Schenck (1881-1969) in New
York.
Goldwyn had been founded in 1916 by Samuel Goldfish (1882-1974)
in partnership with Broadway producers Edgar and Archibald
Selwyn. Goldfish subsequently changed his name to Samuel
Goldwyn. He had earlier been in business with Jesse Lasky
and Louis B. Mayer in a precursor of Paramount
Pictures. As a production house Goldwyn Picture Corp is
primarily known for the 'Leo the Lion' trademark, later
adapted by MGM. Goldwyn split from Lasky and Mayer, going
on to establish Samuel Goldwyn Inc. and Samuel Goldwyn
Studios (later acquired by Warner
Bros) in West Hollywood. Apart from independent output
he's most famous for malapropisms such as "Every
director bites the hand that lays the golden egg"
and "A verbal contract isn't worth the paper it's
written on".
Louis B. Mayer (1885-1957) migrated from Minsk to New
Brunswick, opening a movie theatre in Massachusetts in
1907. After disposing of what had become a major New England
chain to Zukor's Paramount he founded his own production
company in 1917.
As production chief of MGM he served as the public face
of the Hollywood movie colony, maintaining his position
through skill in corporate in-fighting - Goldwyn commented
that the reason so many people turned up at Mayer's funeral
is "that they wanted to make sure he was dead"
- and an ability to generate profits for the studio's
owners on the East Coast throughout the 1920s and 1930s.
His daughter Irene Gladys Mayer married film director
David O Selznick.
the studio system
A takeover by William Fox - with
the endorsement of Joe Schenck - collapsed in 1929.
Under Mayer's and Thalberg's management MGM Studios became
the largest Hollywood film factory, responsible for classics
such as Gone With the Wind and The Wizard
of Oz. It expanded from features into animation in
the late 1930s, with notable success for the Tom &
Jerry series from William Hanna (1910-2001) and Joseph
Barbera (1911-2006).
Post-war it emphasised musicals - eg with Judy Garland
and Gene Kelly - and other sticky confections but like
the other major studios was affected by sagging revenue
and profitability. Management disagreements saw the departure
of Mayer and his replacement Dore Schary. In 1957 MGM
closed its cartoon operations (with Hanna and Barbera
founding their own company, later part of Taft
and then of Time Warner).
Loews separated its exhibition and production operations
in 1954 following the 1949 'Paramount Decree', with the
cinemas forming the basis of the cigarette, hotels, cinema
and insurance conglomerate that under Laurence Tisch acquired
CBS. MGM enjoyed some success with
a gaudy remake of Ben-Hur and television production
but was affected by management uncertainty and difficulties
with overheads.
Kerkorian
In 1969 it was acquired by raider Kirk Kerkorian, who
had gained attention for successful trading in casinos,
property and airlines. Kerkorian sold much MGM property
and memorabilia. MGM's record operations were soly to
Polygram in 1972.
In 1973 the Las Vegas Bonanza hotel was redeveloped
as the MGM Grand; Kerkorian leveraged the MGM
'brand' through use in badging hotels (eg in Reno and
Atlantic City), casinos and airlines.
MGM film operations increasingly centred on its library,
distribution arm and provision of services for independent
producers, rather than production. In 1981 it bought United
Artists - including rights to much of Warner Bros back
catalogue - from the Transamerica conglomerate (which
earlier purchased Kerkorian's TransInternational Airlines)
and made a substantial profit in Coca-Cola's acquisition
of Columbia Pictures.
United Artists dates from 1919 with establishment of a
distribution house by DW Griffith, Charles Chaplin, Mary
Pickford and Douglas Fairbanks. It was acquired by Arthur
Krim in 1952 and sold to Transamerica in 1967.
Kerkorian traded property assets during the early 1980s
before selling MGM/UA to Ted Turner in 1986. Turner sold
United Artists (subsequently rebadged as MGM) and the
MGM trademark back to Kerkorian. The studio lot was sold
to tv production house Lorimar (later acquired by Warner)
and subsequently acquired by Columbia Pictures.
Skase and Parretti
In 1989 Kerkorian agreed to sell MGM to Australian television
and property entrepreneur Christopher Skase.
Skase apparently planned to fund the purchase by 'sweating'
the MGM assets in consumer markets - a strategy successfully
followed by Kerkorian in licensing the library for VCR
and DVD sales - and by pre-selling the rights to Japanese
investors. It was the year that Sony
bought Columbia
Pictures and Tri-Star Pictures from Coca-Cola for US$3.4
billion, undeterred by Matsushita's painful experience
with MCA and Universal (later part of Seagram
and Vivendi).
He is reported to have reached agreement to sell those
rights for $500 million, with the deal falling through
when he sought an extra $100 million at the last moment.
The extra money would presumably have been helpful, as
Kerkorian appears to have raised his price to around $1.5
billion after eliciting interest from Rupert Murdoch.
In the words of subsequent legal action by MGM, Qintex
was guilty of a "failure to consumate" the purchase
and indeed apparently failed to find the $30 million deposit.
The deal was off. Skase subsequently claimed that Kerkorian
reneged on the deal when Sony bid three times as much
for the 'comparable' Columbia Pictures.
One observer commented that Skase's business model
was
to buy a company, sell the assets and then lease them
back. It doesn't take long to burn up the assets that
way. You need a progressively bigger takeover every
two or three years to maintain the cashflow. It was
the end when Christopher missed out on MGM/UA. He was
gone and everyone in the places that counted knew it.
Qintex
melted down in 1989, unable to satisfy demands by its
bankers (exacerbated by delays in regulatory approval
to sell further shares in the resorts) and with regulators
questioning Skase. A year later Skase left Australia and
failed to return, pleading bad health and persecution
by authorities or the media. His personal debts were estimated
at around $172 million.
From his exile in Majorca, where he successfully resisted
extradition attempts by receivers and government agencies
(including claims of Dominican citizenship), he was presumably
able to observe the $3.15 billion failure of the State
Bank of Victoria. The receivers bundled Qintex's broadcast
interests into a discrete company - Seven Network - in
1991. It was listed on the stock exchange in 1993 and
came under the control of Kerry Stokes in 1995 following
disagreements about its involvement in pay television
schemes promoted by Foxtel, OptusVision and other players.
MGM was sold to Italian financier Giancarlo Paretti in
1989 for US$1.3 billion. Parretti had acquired 46.5% of
the European Pathé film
production, distribution and exhibition group as the springboard
for that takeover and had earlier acquired the Cannon
Group, which he confusingly rebadged as Pathe Communications
Corporation.
Kerkorian returns
Kerkorian continued property trading and in 1995 was involved
in the Daimler Benz takeover of Chrysler.
Parretti's empire had collapsed at the beginning of the
decade, after he was unable to repay borrowings. That
default was one reason for the £9 billion collapse
of French bank Credit Lyonnais, Parretti's primary creditor,
in 1993.
MGM was sold to Kerkorian and Australia's Seven
Network in 1996. During that year Kerkorian bought Polygram's
film library for US$253 million.
Seven's involvement was apparently a mix of opportunism
and the network's history of sourcing films from MGM.
The network sold its interests for US$389 million in 1998.
Metromedia deal and beyond
In 1997 MGM acquired Metromedia's
studio properties (Orion Pictures, Goldwyn Entertainment
and the Motion Picture Corporation of America).
Goldwyn Entertainment traced its origins to Samuel Goldwyn
Inc. The Orion Pictures production house had been formed
in 1978 as a joint venture between Warner Bros and three
former UA executives (inc Arthur Krim) after disputes
with UA parent Transamerica. During 1982 Orion merged
with tv producer Filmways, Inc. (which owned American
International Pictures). Metromedia become majority owner
in 1988, after initial investment in 1986. Orion went
into bankruptcy in 1992, emerging in 1996.
In September 2004 a Sony-led consortium
(inc Providence Equity Partners, Texas Pacific Group and
DLJ Merchant Banking Partners) confirmed an in principle
agreement to acquire the MGM production and distribution
operations and its film library for US$5 billion.
studies
For a grounding see the essential The Genius of the
System: Hollywood Filmmaking in the Studio Era (New
York: Pantheon 1988) by Thomas Schatz and Movies &
Money: Financing the American Film Industry (Norwood:
Ablex 1982) by Janet Wasko. They might be usefully supplemented
with Tino Balio's Grand Design: Hollywood as a Modern
Business Enterprise, 1930-1939 (Berkeley: Uni of
California Press 1995),
Christopher Anderson's Hollywood TV: The Studio System
in the Fifties (Austin: Uni of Texas Press 1994)
and
Neal Gabler's An Empire of Their Own: How the Jews
Invented Hollywood (New York: Crown 1988).
Overviews of the studio are provided in The MGM Story:
The Complete History of Sixty-Five Roaring Years
(New York: Portland House 1990) by John Eames & Ronald
Bergen and MGM: When the Lion Roars (Georgia:
Turner 1991) by Peter Hay. Different aspects are highlighted
in The MGM Stock Company: The Golden Era (London:
Ian Allan 1973) by James Parish & Ronald Bauers, The
Making of The Wizard of Oz (New York: Limelight 1984)
by Aljean Harmetz, The Golden Girls of MGM (New
York: Carroll & Graf 2003) by Jane Wayne and MGM's
Greatest Musicals: The Arthur Freed Unit (New York:
Da Capo 1996) by Hugh Fordin.
For its record operations see in particular the three
volume MGM Labels : A Discography (Westport:
Greenwood Press 1998) by Michel Ruppli & Ed Novitsky.
Mayer is profiled in Mayer & Thalberg: The Make-Believe
Saints (New York: Random 1975) by Samuel Marx, the
insightful Hollywood East: Louis B. Mayer and the
Origins of the Studio System (New York: Birch Lane
1992) by Diana Altman, Hollywood Rajah: The Life and
Times of Louis B. Mayer (New York: Holt 1960) by
Bosley Crowther and the problematical Merchant of
Dreams: Louis B. Mayer, MGM and the Secret Hollywood
(New York: Fine 1993) by Charles Higham. A perspective
on Schenck and Mayer is offered in
The Campaign of the Century: Upton Sinclair's Race
for Governor of California and the Birth of Media Politics
(New York: Random 1992) by Greg Mitchell.
Scott Berg's Goldwyn: A Biography (New
York: Knopf 1989) is recommended. Other accounts include
Carol Easton's The Search for Sam Goldwyn: A Biography
(New York: Morrow 1976) and Michael Freedland's The
Goldwyn Touch: A Biography of Sam Goldwyn (London:
Harrap 1986)
There has been no recent major biography of Kirk Kerkorian.
Insights are offered in Fadeout: the calamitous final
days of MGM (New York: Morrow 1990) by Peter Bart,
Taken for a Ride: How Daimler-Benz Drove Off With
Chrysler (New York: HarperBusiness 2001) by Bill
Vlasic & Bradley Stertz, the upbeat Kerkorian,
An American Success Story (New York: Dial 1974) by
Dial Torgerson and The Players: The Men Who Made Las
Vegas (Reno: Uni of Nevada Press 1997) edited by
Jack Sheehan.
He is a figure in The Money and the Power: The Making
of Las Vegas and its Hold on America (London: Pimlico
2003) by Sally Denton & Roger Morris and Suburban
Xanadu: The Casino Resort on the Las Vegas Strip and Beyond
(London: Routledge 2003) by David Schwartz.
For Skase see the bibliography in the discussion
of the Australian Seven Network and Qintex elsewhere on
this site.
Pointers to writing about Sony
are also featured in this site.
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