Sony-Time Warner battle for MGM intensifies

MUMBAI: The battle over the acquisition of MGM between Sony and Time Warner is heating up.

While at this point Time Warner appears to be ahead, Sony CFO Katsumi Ihara has reiterated that the company needs to buy MGM to expand its own film unit.

In an interview to Bloomberg, Ihara said that acquiring MGM would boost Sony's movie unit, giving it an expanded movie library and rights to films in development. It was in April that Sony had expressed its interest in buying MGM.

A recent report in the Wall Street Journal had stated that while Sony, Texas Pacific Group and Providence Equity Partners are negotiating to buy MGM for almost $5 billion, Time Warner has offered $4.6 billion in cash.

Another report in said that if MGM goes to Time Warner then it will greatly facilitate the making of The Lord Of The Rings prequel The Hobbit by LOTR director Peter Jackson and Time Warner division New Line Cinema. The movie rights to The Hobbit are held currently by MGM.

This year Sony's biggest hit has been Spider-Man 2 which has earned $740 million worldwide. MGM's library consists of over 4,000 films which include the James Bond flicks. In India, MGM has a JV with Zee for the channel Zee MGM.

If the deal were to go through in favour of Sony, it would give the Japanese company a chance to increase brand recognition in the US beyond its core electronics business. Sony will then probably fold MGM into its Sony Pictures Entertainment division.

At the moment Sony's movie business accounts for less than 10 per cent of its total revenue. An MGM acquisition would no doubt change that ratio.

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