Miramax, MGM, Overture face declining DVD values
Beancounters in Hollywood are busy trying to figure out just what digits should follow the dollar signs for the thousands of movies in MGM's vault, the hundreds at Miramax, and a handful owned by Overture Films, now that Liberty Media's John Malone is looking to unleash himself from the struggling venture.
With the formula for homevideo returns no longer relevant, and Hollywood waiting for the next big markets for a movie's afterlife, money men are challenged to determine just how valuable libraries of aging titles really are.
One thing is certain: They aren't worth as much as they once were.
While MGM is hoping for more than $2 billion for more than 4,000 movies, including the James Bond franchise and half of the rights of two upcoming "Hobbit" films, and 10,000 TV episodes, the nearly 10 potential bidders, including Time Warner and Lionsgate are looking to pay less than that.
Investment bankers' recommended pricetag for Miramax, made up of 700 movies like "There Will Be Blood," "Shakespeare in Love," "Chicago" and "Pulp Fiction." ranges from $300 million to $700 million. Internally, Disney wants as much as $1.5 billion. Either way, each is far more than the $80 million Disney paid the Weinstein brothers to purchase the indie label in 1993.
DVD sales continue to decline at a rapid rate, as consumers switch over to rental. Other distribution platforms, especially digital video-on-demand, are emerging as lucrative placements, but none are making up for the loss yet.
For example, Lionsgate said it will collect close to 20% of the $39 million that its actioner "Gamer" earned at the worldwide box office from video-on-demand. And that figure is said to be $3 million more than what it would have generated from VOD three years ago.
Either way, Lionsgate is especially upbeat on the economic prospects new distribution platforms will provide -- signaling the potential upside for other smart library owners.
"We continue to believe that when you look at packaged media on demand and digital as a whole, home entertainment remains a vibrant business," Feltheimer said. "You just can't keep operating the same way if you want to maximize the performance of your content. Streaming and downloading our movies and television through to iPods, iPads, iPhones, Xbox, PS3 and a numerable other devices will be generating new business and new customers for our content."