Sony Chief Executive Nobuyuki Idei said Wednesday the Japanese electronics and entertainment giant was seriously considering the acquisition of U.S. film studio Metro-Goldwyn-Mayer but declined to say when a decision was expected.
“We will not go into an unprofitable business,” he told reporters, adding that Sony has been thinking about movie deals since the 1990s. “We are confident we will make the right decision.”
Earlier this month, MGM and Sony agreed to enter talks about a possible acquisition to weigh a $5 billion bid for the legendary studio, according to sources who spoke on condition of anonymity.
But Idei and Howard Stringer, vice chairman and chief operating officer in charge of entertainment, refused to give further details. Idei refused to say when a decision was expected.
“We are in the stage of exclusive negotiations,” Stringer said.
Bringing together the electronics sector with movies, music and other entertainment has long been the pillar of Tokyo-based Sony’s vision. Sony bought Columbia Pictures Entertainment for $3.4 billion in 1989.
But Sony’s money-losing management of the movie studio was widely criticized as disastrous, and skepticism grew about “synergies” that Sony promised would boost profits in its core electronics sector by exploiting its entertainment library.
Credit rating agency Standard & Poors said in a release that a buyout of MGM could hurt Sony because making money with movies is risky and MGM racked up losses in the last three years.
“There are concerns such a deal could hurt Sony’s balance sheet,” it said.
MGM has been looking for merger or acquisition opportunities.
Stringer said Sony’s film division was doing well, and that its last seven movies had made money, which is unusual in the movie business. Sony Pictures has had some hits in recent years, including the blockbuster “Spider-Man.”
Sony officials presenting an outline of a company strategy for the fiscal year ending March 31, 2005 said the development of more Internet-linking electronics gadgets will create growing business opportunities for Sony in coming years.
Idei said a far-reaching “transformation” will happen in 2006 in entertainment, media, electronics and other industries as computer technology becomes widespread and easier to use, connecting people to a rich Internet content in a way that will allow Sony to cash in on its longtime strategy.
Such products will include digital TVs, next-generation game machines, cell phones and mobile computers, Sony officials said.
MGM has an extensive film library, which includes such films as the “Pink Panther” and “Rocky” franchises, plus such Academy Award winners as “West Side Story,” “Midnight Cowboy” and “Annie Hall.”
MGM’s primary stockholder, Kirk Kerkorian, sold MGM in 1986 to Ted Turner, then bought it back a few months later, minus its pre-1986 film library.
Classic MGM titles such as “Gone With the Wind” and “An American in Paris,” are still owned by Turner, though MGM won back some distribution rights to part of its pre-1986 library in 2000.
