MGM Borrows $2.1 Billion to Finance Epix Deal, Grow Company
The mini-major studio closed its deal to acquire the premium cable network Thursday
Matt Pressberg | May 11, 2017 @ 12:59 PM
Last Updated: May 11, 2017 @ 1:00 PM
MGM/Epix
Metro-Goldwyn-Mayer has raised $2.1 billion in new debt that will allow the company to finance its $1 billion purchase of premium cable network Epix and pursue other growth opportunities, the company announced Thursday.
The new debt package arranged by J.P. Morgan Chase with a syndicate of lenders includes a $1 billion five-year revolving credit facility (which comes with another optional $250 million in available financing) and a new $850 million five-year term loan. The financing, which the company said was oversubscribed by 50 percent, lowers the company’s borrowing costs and allows it to pursue its “strategic growth initiatives.”
It also provides MGM with the necessary funding for its $1 billion acquisition of the 80.9 percent of Epix the studio did not previously own, which was formerly held by Viacom and Lionsgate. That deal also closed Thursday, giving MGM sole control of Epix’ four linear TV channels, which are available through traditional and digital distributors. Epix’s movie library has a combined gross of $4 billion, and the channel also airs original series such as the Golden Globe-nominated “Graves.”
“The speed of execution, favorable terms and flexible structure of our credit facility, which was substantially oversubscribed, is indicative of MGM’s solid financial position and strong relationships with the financial community,” Gary Barber, MGM’s Chairman and Chief Executive Officer, said in a statement. “I would like to thank all of our lenders for their tremendous support of MGM and our acquisition of Epix. This transformative transaction is an important milestone in the continued growth trajectory of MGM.”
“The overwhelming support from MGM’s financing syndicate is a testament to the quality of MGM’s management team and strategy,” David Shaheen, Head of J.P. Morgan’s Entertainment banking team, said in the statement. “This transaction builds on the continued success the company has achieved over the last several years.”
10 Biggest Billion-Dollar Entertainment Deals in 2016 (Photos)
Media and entertainment dealmakers returned in full force this year after a quiet 2015, as there were nine mergers and acquisitions valued at more than $1 billion -- from Chinese buyers such as the Dalian Wanda Group to AT&T, which agreed to acquire Time Warner for $85 billion. Here's a rundown of the biggest.
Various
10. Disney buys a minority stake in BAMTech
Price tag: $1 billion
In August, the Mouse House announced that it paid $1 billion for a 33 percent stake in streaming video technology company BAMTech, which was spun off from Major League Baseball’s MLB Advanced Media. Disney plans to use BAMTech’s technology to launch a standalone ESPN streaming service – but without the same content as linear ESPN.
The real estate and entertainment conglomerate owned by China’s richest man continues to snap up showbiz companies by the billion, acquiring the Golden Globes and American Music Awards producer for a cool $1 billion earlier this month.
Dick Clark Productions
8. Rovi acquires TiVo
Price tag: $1.1 billion
Video technology firm Rovi Corp., bought the pioneering live-TV recording tech company for $1.1 billion in a deal that was finalized in September. After the deal was complete, Rovi adopted the better-known TiVo name.
Getty Images
7. AMC Theatres buys Carmike Cinemas
Price tag: $1.2 billion
Wanda-owned AMC Theatres acquired Carmike, the U.S.’ fourth-largest exhibitor, forming the biggest theater chain in the country with more than 600 theaters. That surpasses Regal Entertainment, which operates 565 locations.
AMC/Carmike
6. AMC Theatres buys Odeon & UCI Cinemas
Price tag: $1.2 billion
AMC also added Odeon & UCI Cinemas, Europe's biggest chain, to its ever-expanding suite of cinemas. AMC will rename the company to Odeon Cinemas Group and maintain its London headquarters.
AMC/Odeon & UCI
5. Dalian Wanda Group buys Legendary Entertainment
Price tag: $3.5 billion
Wanda was responsible for the first megadeal of 2016, when it acquired the “Jurassic World” production company for $3.5 billion. Legendary lost $500 million in 2015, but its action-packed fare such as “Warcraft” is popular in China’s fast-growing movie market.
Legendary/Wanda
4. Comcast's NBCUniversal buys DreamWorks
Price tag: $3.8 billion
The blowout success of animated films like “Zootopia” and “Finding Dory” was one of the stories of 2016, and NBCU doubled down on the genre by adding the “Kung Fu Panda” and “Shrek” studio to its fold.
DreamWorks
3. Lionsgate merges with Starz
Price tag: $4.4 billion
The “Hunger Games” studio and premium cable channel announced their merger plans in June, a year after telecom billionaire and major Starz shareholder John Malone bought a stake in Lionsgate. Starz will become an independently run subsidiary of Lionsgate once the deal is officially approved.
Lionsgate/Starz
2. Verizon buys Yahoo
Price tag: $4.8 billion – or maybe less
The embattled Internet 1.0 company finally found its lifeboat, selling its core business to Verizon for $4.8 billion in July, eight years after rejecting a $45 billion bid from Microsoft. But after the extent of Yahoo’s 2014 hack was revealed, Verizon was pushing for a $1 billion discount, and has been taking a second look at the deal.
Verizon/Yahoo
1. AT&T agrees to acquire Time Warner
Price tag: $85.4 billion
AT&T agreed to buy Time Warner, combining two century-old companies to create a content and distribution powerhouse in the biggest media deal since the ill-fated 2000 AOL-Time Warner merger. One caveat: Donald Trump, who has been an outspoken critic of Time Warner’s CNN, had threatened to block the deal. However, a Wall Street-friendly Republican Congress could provide a smoother path.
AT&T/Time Warner
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Rewind 2016: From China’s Dalian Wanda Group to AT&T, deep-pocketed buyers were chasing content all year
Media and entertainment dealmakers returned in full force this year after a quiet 2015, as there were nine mergers and acquisitions valued at more than $1 billion -- from Chinese buyers such as the Dalian Wanda Group to AT&T, which agreed to acquire Time Warner for $85 billion. Here's a rundown of the biggest.
Various
Disney
