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MGM: Sony seems short of synergy

Bizarre news today over at MGM: It’s dumping its distribution arrangement with Sony and headed to Fox.

That’s more than a little odd, because Sony owns a fifth of MGM.

As Reuters points out, “For Sony, MGM‘s decision cuts both ways. Sony’s home video business will lose lucrative distribution fees it would have earned for releasing titles from MGM‘s library of 4,000 movies and 10,000 TV episodes. However, Sony will benefit if MGM makes more money because Sony owns 20 percent of the company.”
lion.jpg.jpg

Yeah, well, that last part is true, I guess. But the fact that MGM is dumping Sony shows that Sir Howard Stringer has the tiger, er, lion, by the tail all along: Sony paid $3 billion last year so it could access MGM’s massive library, not so it could be in the movie business with MGM. Now, the opposite has happened: MGM‘s senior-most production executives are all pink-slipped, and the “studio” is essentially a shell company that releases films other companies have financed.

The fact that Sony will be get to release another Bond film and still another “Pink Panther” film via MGM is hardly an apologia for synergy; it’s a face-saving move that suggests Sony’s synergistic investment may never have made sense in the first place.

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