Consortium led by Sony agrees to acquire studio

The deal is a victory for the Sony group, which won out over Time Warner.
LOS ANGELES (AP) -- A consortium led by Sony Corp. that includes cable television giant Comcast Corp. has entered into a definitive agreement to acquire venerable film studio Metro-Goldwyn-Mayer.
The Sony-led group will pay $12 per share for MGM, or about $2.94 billion in cash, and assume about $2 billion in debt for a deal valued at nearly $5 billion.
MGM will continue to operate as a separate, private company based in Los Angeles after the deal closes next year, with Sony Pictures distributing MGM's films and television shows as well as MGM's valuable library of more than 4,000 films, the companies said.
Part-owner
Philadelphia-based Comcast, which had earlier agreed to a distribution deal with Sony, now becomes a part-owner of MGM. Comcast will use Sony Pictures' and MGM's vast catalog of films and TV programs to feed its nascent video-on-demand service. Comcast and Sony have also agreed to a joint venture to create new cable channels.
The parties had agreed in principle to the deal earlier this month. The acquisition must still be approved by MGM's shareholders and regulatory agencies.
The deal marks a significant victory for the Sony-led group, which had been seen as the underdog in the bidding to Time Warner Inc. Sony started discussions with MGM in April, while Time Warner joined later this summer.
Last week, Sony raised its offer after securing the distribution deal with Comcast, setting off a bidding war that Time Warner abandoned.
Private investment firm Providence Equity Partners is putting up most of the cash, $525 million, followed by Texas Pacific Group with $350 million.
Investments
Sony and Comcast will each invest $300 million. DLJ Merchant Banking Partners will invest $125 million.
JP Morgan Chase will lead a banking syndicate to provide up to $4.25 billion in senior debt financing along with Credit Suisse First Boston.
"We all look forward to preserving and enhancing the legendary franchise that is MGM, and to ensuring that its extraordinary content continues to be enjoyed by people around the world," Howard Stringer, Sony Corp. of America chairman and CEO, said in a prepared statement.
Until the deal closes, MGM will continue to fund and produce a full slate of films, including next year a new James Bond feature and a new "Pink Panther" movie starring Steve Martin.
After the deal closes, Sony will co-finance and produce films with MGM.
It was unclear what will happen to MGM's senior management, including Chairman Alex Yemenidjian and Chris McGurk, vice chairman and chief operating officer.
A Sony spokesman said it was too early to make such decisions.
Upon approval of the deal, MGM employees would be given the chance to apply for available positions, the companies said Thursday.
Third sale
The sale would mark the third time billionaire investor Kirk Kerkorian has sold the film studio. Through his Tracinda Group, Kerkorian owns 74 percent of MGM's outstanding shares, and the sale to Sony would net him about $2.1 billion.
For the past two years, MGM has been hunting ways to grow larger, either through acquisitions or mergers.
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