MGM Signs $250 Million Agreement to Acquire PolyGram Film Library

On October 22, The Seagram Company Ltd. and Metro-Goldwyn-Mayer Inc. (MGM) announced that they have entered into an agreement in principle to transfer certain library assets of PolyGram Filmed Entertainment (PFE), a unit of PolyGram N.V., to MGM's wholly owned subsidiary, Orion Pictures Corporation, following Seagram's pending acquisition of PolyGram. The purchase price for the library will be $250 million, of which $235 million will be paid in cash at the closing in January 1999; the remaining $15 million will come from the library's cash flow prior to closing.

With this acquisition, MGM will own the largest film library in the world, currently comprising about 5200 titles and including over half of all Hollywood studio films produced since 1948. The PFE Library consists of over 1,300 titles, including such Academy Award winners as Fargo, The Graduate, Dead Man Walking, My Left Foot, The Crying Game, Usual Suspects, and Kiss of the Spider Woman, along with other titles such as Four Weddings and a Funeral and Room With a View.

The PFE Library also incorporates the Epic library (including When Harry Met Sally and City Slickers), the Island/Atlantic library (including Baghdad Cafe), and the Virgin/Palace library (including Sex, Lies and Videotape). The ITC library is not included in this transaction, and discussions are ongoing with other parties regarding the sale of this library.

According to Edgar Bronfman, Jr., president and CEO of Seagram, "As a result of the auction process that was conducted regarding PolyGram Filmed Entertainment, we have concluded that the sale of these library assets would bring significant value to our shareholders. While we continue to pursue the sale of the ITC library, we will also examine our strategic alternatives regarding PolyGram Film's production and distribution operations."