EVEN though Sony may have the upper hand in negotiations right now, NBC has a better chance at ending up as the owner of MGM.
There are several reasons for that, not the least of which is that MGM majority owner Kirk Kerkorian would prefer to receive non-taxable stock in NBC’s parent company General Electric than the cash he’d get in a deal with Sony.
As I said in a column last Sept. 4, which carried the headline “Kirk could get in on Vivendi-NBC,” MGM pulled out of the negotiations for Vivendi’s Universal Studios last year when the price became too rich.
But there was always the intention among MGM’s top people to offer themselves up as the third partner in the NBC and Vivendi deal. That couldn’t happen, however, until NBC and Vivendi closed on their merger.
That happened yesterday. And soon afterward, NBC head Bob Wright spilled the beans by saying he’d love to own MGM.
The benefits of a merger of MGM with NBC Vivendi are many.
First, the companies would have a combined film library of over 8,000 titles at a time when DVD sales are driving many Hollywood companies’ profits.
What an MGM/NBC Vivendi deal would do (that a Sony transaction doesn’t) is give the companies distribution channels for all those movies.
“They were salivating,” said one source familiar with NBC’s mood as the network sat on the sidelines waiting for its Vivendi deal to be completed.
In fact, the expectation that NBC – and probably others – would join the bidding is probably behind the fact that MGM set its board meeting for late June. Sony’s exclusivity deal ends well before that.
Who else might be interested? There are the usual names floating around and one very unusual one. But as they do out in Hollywood, I’ll have to leave this as a cliffhanger for another column.
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Next week is one of those options expiration periods.
The stock market usually benefits when stock options expire and traders buy the underlying stock that is disappearing with the options contracts.
That often helps stock prices. After the past week, I thought you might need some good news.
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Interest rates are rising, and the Federal Reserve will soon push them up some more.
So shouldn’t Alan Greenspan apologize for recommending a few months back that homebuyers take out adjustable rate mortgages?
“American consumers might benefit if lenders provided greater mortgage-product alternatives to the fixed-rate mortgage,” Greenspan said at the end of February, a statement widely interpreted as an endorsement of adjustable rate mortgages.
Anyone who took out an adjustable rate mortgage – and didn’t have firm plans to move within a few years – has paid a hefty price if they followed Greenspan’s advice.
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A recent survey shows that the rising price of gasoline is getting to drivers.
Progressive, the insurance company, says half of the 1,000 drivers it surveyed said they would change their driving habits. Ninety-two percent said they would drive out of their way to buy gas that was 20 cents less a gallon and 19 percent said they plan to vacation closer to home.
I’m just going to coast downhill and vacation in whatever valley the car happens to stop.