MGM Buys 20% Stake in Four Channels

02 February 2001

Movie studio Metro-Goldwyn-Mayer is to acquire a 20% holding in four cable TV channels for $825 million.

MGM has struck a deal with Rainbow Media, a division of Cablevision Systems, to invest in the Independent Film Channel, Bravo, American Movie Classics and WE: Women’s Entertainment. The quartet had also attracted interest from Sony, Viacom and NBC.

Rainbow will use the influx of cash to pay off or reduce its $700m debt mountain and begin expansion plans in the run up to the issue of a new tracking stock.

MGM is not obliged to increase its stake in the future, but neither side ruled out the possibility. The channels give MGM a TV outlet for its movies, something it previously lacked unlike other studios. Although there are no “contractual commitments” to supply the quartet with films at the moment, “that’s a desire both parties have,” according to MGM chief executive Alex Yemenidjian.

News source: Wall Street Journal