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Sony Wins!!

The bidding war between Time Warner and Sony over the MGM movie studios and library are over.SONY HAS WON!The price tag was not cheap though. For details and what this may mean for the future of HD-DVD read ahead… Time Warner subsidiary CNN/Money has the details –“Sony nabs MGM for $5B, source says Japanese firm reportedly reaches a deal to buy the legendary studio after Time Warner drops out.September 13, 2004: 2:43 PM EDT NEW YORK (CNN/Money) – Sony Corp. has reportedly reached an agreement to buy film studio Metro-Goldwyn-Meyer Inc. in a deal worth about $5 billion, a wire report said Monday, just hours after rival Time Warner Inc. dropped out of the bidding. Sony (SNE: Research, Estimates) and its partners — investor groups Providence Equity Partners, Texas Pacific Group and an arm of Credit Suisse First Boston — are now offering to buy MGM for about $12 a share, or about $2.9 billion in stock, plus the assumption of $2 billion of debt, Reuters reported. That was up 75 cents a share from Sony’s original bid of $11.25 a share, or a little under $4.7 billion, including the debt, the news agency said, citing a person close to the talks. Earlier Monday, Time Warner withdrew its bid for MGM, saying the two entertainment firms have failed to agree on a price. “Although MGM is a valuable asset, we have decided to withdraw our bid,” Dick Parsons, chief executive of Time Warner, said in a statement. “Unfortunately, Time Warner could not reach agreement with MGM at a price that would have represented a prudent use of our growing financial capacity.” Time Warner (TWX: up $0.08 to $16.59, Research, Estimates) was offering about $11 a share, or $4.5 billion to $4.6 billion, for MGM (MGM: up $0.47 to $11.58, Research, Estimates). Entertainment firms have been vying for MGM to get its library of more than 4,000 films, which includes the James Bond, Pink Panther and Rocky titles. The acquirer would be able to reformat the library’s films for sale in the sizzling DVD market. Reuters also reported that cable television giant Comcast Corp. (CMCSA: up $0.06 to $28.06, Research, Estimates) will be a minority investor in Sony’s purchase of MGM. Time Warner is the parent company of CNN/Money.” What does this mean to you, the home consumer? a few things. Both Sony and Time Warner have created strategies to implement a new consumer home video format capable of High Definition movie playback and recording from optical discs. Sony calls their upcoming format Blu-Ray and Time Warner backs a format called HD-DVD. MGM studios has the largest library of Hollywood movie titles in the world including such staples as James Bond, Rocky and The Wizard of Oz. Whoever won the bidding war would have a huge advantage when bringing their format to market.Having already demonstated prototypes of their Blu-Ray technology and announcing that the upcoming Playstation 3 would utilize the format for game and video playback, Sony already had a huge lead. It seems the aquisition of MGM may be the final nail in the coffin of HD-DVD before it even arrives.In other words – HD-DVD may be D.O.A.Only time will tell for sure and the issue is sure to heat up even more as further prototypes and working products are brought to market a few years from now.For more information on upcoming formats, check out some previous stories we’ve covered on the subject:

  • Format Wars: The WB Strikes Back
  • The Future is Now?
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