Sony-MGM Is Definitive

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Sony Corp. last Thursday reached a definitive agreement to buy Metro-Goldwyn-Mayer Inc. — and Comcast Corp. will be an equity participant.

The Sony-MGM deal was announced a week earlier, but Comcast — which had cut separate agreements with Sony for video-on-demand content and for a joint programming development venture — had been on the fence concerning its investment in the MGM deal.

Sony said it will invest $300 million in the venture, as will Comcast. Other participants: Providence Equity Partners ($525 million); Texas Pacific Group ($350 million); and DLJ Merchant Banking Partners ($125 million).

About $4.25 billion in debt financing will be arranged by JP Morgan Chase & Co. and Credit Suisse First Boston.

Sony said it expects the deal — valued at about $4.9 billion, including the assumption of $2 billion in MGM debt — to close in mid-2005.

“This is a terrific partnership,” Comcast chairman and CEO Brian Roberts said in a statement.

“We are delighted to be working with Sony and the other partners to substantially expand the content available to our customers, and our direct investment further underscores our excitement over this opportunity.”

The final deal comes after reports of squabbling between its private-equity partners. Although those differences apparently have been worked out, some of the players in the deal appear to have modified their participation.

Providence and Texas Pacific seemed to have bumped up their participation by $75 million and $50 million, respectively (from $450 million and $300 million, according to reports).

DLJ is the only partner that modified its investment downward, cutting its participation in half from $250 million to $125 million.

With the investment, Comcast is expected to receive a 20% equity interest in Sony/MGM. The acquisition also allows the MGM film and television library — with more than 4,000 movies and 10,000 television episodes — to be included in Comcast’s separate VOD and joint programming venture with Sony.

MGM also owns interests in dozens of international channels that could be fodder for new cable channels on Comcast systems.

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