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Metro-Goldwyn-Mayer Inc. (or MGM) is a large media company, involved primarily in the production and distribution of cinema and television programs. Its principal subsidiaries are MGM Studios Inc., United Artists Corporation, and Orion Pictures Corporation. It was acquired by Sony Pictures Entertainment for $US2.9 billion in September 2004.
The name is taken from the three companies that formed a corporate merger to create MGM Studios in 1924; Metro Picture Corporation (formed in 1915), Goldwyn Picture Corporation (1917), and Louis B. Mayer Pictures (1918), under the control of movie theater magnate Marcus Loew. Louis B. Mayer became the studio boss, and Irving Thalberg, the "Boy Wonder", was head of production. They took on the motto Ars Gratia Artis (Art for Art's Sake) and their trademark lion, "Leo" in 1928 (who had been born in captivity in Dublin Zoo in Ireland).
Not long after this merger, Loew died, leaving control of the studios to his associate Nicholas Schenck; Schenck then attempted to sell the properties to what would later become 20th Century Fox, but was unsuccessful. Mayer was quite displeased with this, and tensions between him and Schenck would be delicate from this point onward.
Under Mayer's and Thalberg's management, MGM Studios became the largest film company in Hollywood (although they were actually located in Culver City) by the mid-1930s. In this era, they produced a number of classic films, including Grand Hotel and the Tarzan series, and made stars out of Greta Garbo and Joan Crawford, among others. Thalberg was removed from his position as head of production in 1932, after disputes with Mayer and Schenck, and subsequently suffering a heart attack; at that point, Mayer started bringing in independent producers (notably David O. Selznick) to cover the studio's output. When Thalberg returned the next year, he was reduced to nothing more than a unit producer.
After Thalberg's death in 1936, Mayer had full control of the day-to-day production duties of the studio, and MGM's output progressed from the literary works Thalberg had preferred to the crowd-pleasers Mayer preferred. Between 1936 and the start of World War II, MGM produced a number of now-classic films, including Gone With the Wind and The Wizard of Oz. During the war, MGM threw itself head-first into war support; many MGM stars helped sell war bonds and performed at USO shows, and a few MGM personnel (notably James Stewart and Clark Gable) enlisted.
During this time, MGM also became involved in the animation business. Their animation department started in the late 1930s, when Hugh Harman and Rudolph Ising came over from Warner Bros. Later on, MGM became home to Tex Avery (who joined them in 1941 after a dispute with Warners producer Leon Schlesinger). Tex produced a number of famous shorts at MGM, including Red-Hot Riding Hood, Swing Shift Cinderella, and the Droopy series. MGM's biggest cartoon stars, however, were the cat-and-mouse duo of Tom and Jerry. Created by William Hanna and Joseph Barbera, Tom and Jerry won MGM several Oscars and nominations.
After the war, MGM underwent a sea change, and started primarily producing musicals. Most of the great stars of song and dance worked for MGM at the time, including Judy Garland, Fred Astaire, Gene Kelly, and Frank Sinatra. Despite the success, the studio eventually hit a lull around 1948, and Schenck demanded a "new Thalberg". Writer and producer Dore Schary was hired for this job, and almost immediately the conflicts began. Mayer's taste for wholesomeness and "beautiful" movies went completely against Schary's desire for message pictures and gritty realism. There were also questions of Mayer's integrity; for example, he was said to spend more time at the racetrack than at the studio. By 1951, Mayer was fed up; he called the head office and said, "It's either him, or me." Schenck picked Schary, ousting Mayer from the post he'd held for 27 years. Mayer died in 1957.
As the studio system faded in the late 1950s and 1960s, so did MGM's prestige. In 1957 (by coincidence, the year when Louis B. Mayer passed away), the studio lost money for the first time, and the burgeoning production costs of Raintree County prompted the studio to release Schary from his contract. 1957 also marked the end of the classic cartoon era at MGM when the MGM brass shuttered the unit. Hanna and Barbera left to found their own company, Hanna-Barbera Productions, and production of Tom and Jerry shorts was outsourced, first to a Eastern European-based unit led by Gene Deitch, and then to Chuck Jones's "Sib Tower 12 Productions". Jones' group also produced their own works, winning an Oscar for a cartoon version of The Dot and the Line, as well as producing the classic Christmas special How the Grinch Stole Christmas! Jones' association with MGM ended in 1967.
In 1959, Loew's was forced to sell its theaters, creating another financial burden; MGM bet the company's future on a remake of Ben-Hur, which ended up becoming one of the biggest hits ever. There was also the phenomenon of television to deal with, and while MGM's first attempts were inauspicious (M-G-M Parade), later shows (such as The Thin Man, The Courtship of Eddie's Father and especially CHiPs) performed better.
Despite all this, the company never made money consistently, and many managers and businessmen went through the company's upper management, trying to stem the losses.
The firm was purchased (some say raided) by Nevada millionaire Kirk Kerkorian in 1969. He downsized the company under president James T. Aubrey, Jr. and sold off massive amounts of historical memorabilia, including Dorothy's red slippers (from The Wizard of Oz), and several acres of MGM's backlots (which were razed to build houses).
Through the 1970s the studio output slowed considerably; Kerkorian sold MGM's distribution system in 1973, and gradually distanced himself from the daily operation of the studio. Despite the decline, the studio did manage to release a few well-remembered films, such as Shaft, Logan's Run, and Fame. In 1979, Kerkorian issued a statement claiming that MGM was now primarily a hotel company; however, he also managed to expand the overall film library and production system with the purchase of United Artists in 1981, forming MGM/UA. However, big plans to bring MGM back to its original glory were not to be, despite the hiring of David Begelman, the beleagured Columbia Pictures executive.
In 1986, Kerkorian sold the combined MGM/UA to Ted Turner. Under pressure from the crushing debt load of the studios (in particular UA, which was still hurting from the failure of Heaven's Gate), and also concerned that Kerkorian had charged too much for the company, Turner kept ownership of the company for exactly 74 days. To help recoup his investment, he sold all of United Artists and the MGM trademark back to Kerkorian. The studio lot was sold to the TV production firm Lorimar, which in turn, was later acquired by Warner Bros.; in 1990, the lot was sold to Columbia Pictures, in exchange for the half of Warner's lot they'd rented since the 1970s. Turner kept the MGM back catalog, however, which passed on to Warners as well in 1996. (How much of MGM's back catalogue Turner actually had rights to was a point of conflict for many years; it was eventually decided that Turner owned all of the pre-merger MGM back catalog, including the pre-1948 Warner Bros. films and shorts that UA had acquired many years earlier for television, as well as 1982-1985 MGM/UA films that were presented as MGM films in the credits).
Also in 1990, the studio was purchased by Italian financier Giancarlo Parretti, owner of Pathé's holdings. Parretti eventually defaulted on the loans he'd used to buy the studio, and his bank, Credit Lyonnais, foreclosed on him in 1992. Lyonnais was unable to stem the tide of red ink during the mid-1990s (despite a few critical and commercial successes), and sold the studio back to Kerkorian (as part of a group composed of his Tracinda company and the Australian Seven Network) in 1996.
In 1997, MGM purchased Metromedia's studio properties (Orion Pictures, Goldwyn Entertainment, and the Motion Picture Corporation of America), further enlarging their movie back catalog. Since then, MGM has had a few theatrical hits (such as the later James Bond films, Legally Blonde and Barbershop), and some costly flops (such as a remake of the 1975 UA film Rollerball) but also has had some success releasing its now-gigantic library of films to home video.
In late 2003, some of MGM's competitors started to make bids to buy the studio. The James Bond franchise and the back catalog have been cited as the primary interests. The first suitor was Time Warner, who negotiated with MGM for a short period in early 2004 unsuccessfully. After this, Sony (representing its Sony Pictures unit) entered a bid to buy the studio, along with venture capital groups Texas Pacific Group and Providence Equity Partners, and for a time they were in exclusive negotiations. Later on, Time Warner made a counter-bid (which Ted Turner reportedly tried to block), and as of September 1, Time Warner was considered the leading candidate.
On September 13, 2004, Sony increased its bid of $11.25/share (roughly $4.7 billion) to $12/share ($5 billion), and Time Warner subsequently withdrew its bid of $11/share ($4.5 billion). MGM and Sony agreed on a purchase price of nearly $5 billion, which includes roughly $2 billion in MGM debt . MGM was the last independent major U.S. studio to be sold.
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