• Market Crumbs

MGM Looks For A Buyer Amid Content Euphoria

Image via Glenn Carstens-Peters on Unsplash

With much of the world on lockdown for the better part of this year, it's not surprising that people have turned to streaming services and content providers to stay entertained.

Shares of Netflix are up more than 60% so far this year as a strong first half of the year led the company to forecast a record 34 million paid net adds for this year, which would be well above the prior high of 28.6 million in 2018.

Shares of Disney last week soared to a new all-time high after the company raised its subscriber forecasts for Disney+ and announced 105 movies and TV series will be released, with 80% of them going direct-to-consumer through its various media properties.

Earlier this year live TV streaming platform fuboTV merged with FaceBank Group to join the public markets. The combined company, which wants to "create a content delivery platform for traditional and future-form IP," has become one of the hottest stocks as of late and is up more than 100% over the last week alone.

Amid the investor frenzy for anything relating to content streaming, the Wall Street Journal reported earlier this week that MGM Holdings, which is notable for its co-ownership of the James Bond franchise, has enlisted Morgan Stanley and LionTree LLC to begin a formal sale process.

MGM has a value of about $5.5 billion, including debt, based on privately traded shares. Despite exploring a sale multiple times over the previous few years, MGM was unable to find a buyer at the price it was seeking.

MGM reportedly believes its extensive library, which consists of more than 4,000 titles and 17,000 hours of television programming, could be valuable to companies looking to expand their streaming services. MGM is looking beyond Hollywood this time as it reportedly believes an international media company, private-equity investor or even a blank-check company could be interested in making a deal.

MGM's largest shareholder, hedge fund Anchorage Capital Group, is facing pressure following weak performance and has seen its MGM investment become a larger portion of its portfolio as the firm's assets under management have shrunk. Anchorage Capital is founded by former Goldman Sachs executive Kevin Ulrich, who also sits on MGM's board of directors.

Given the troubles facing MGM's largest investor and the release of MGM's latest Bond film continuing to face delays, it may not be long before MGM finds a buyer as demand for content investments remains strong.

Leftover Crumbs

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