June 15, 2018
In the corporate annals of executive buyouts, few are as crazy as Metro Goldwyn Mayer’s (MGM) decision to purchase the equity stake of fired CEO Gary Barber for $260 million.
That’s on top of the $15.4 million golden parachute Barber got after unexpectedly getting the axe in March – just five months after privately-held MGM extended his employment contract through 2020.
Media reports suggest there had been friction between Barber and Kevin Ulrich, the boss at investment group Anchorage Capital — MGM’s largest investor — over the future of the studio.
Apparently, it was a quarter-of-a-billion-dollar rift.
Indeed, as part of the buyout — which involved MGM tapping into its credit facility — Barber agreed to customary “standstill provisions” that prohibit him from competing directly on MGM-related matters for a three-year period.
If Barber, who, since his ouster, had reportedly been trying to line up creditors to acquire MGM, was such a threat, why not keep him on the payroll?
Barber, together with Roger Birnbaum, helped MGM Studios emerge out of bankruptcy in 2010 through the usual cost-cutting restructuring taken by companies under Chapter 11 protection or in M&A crosshairs.
The executive in 2017 spearheaded complete ownership of premium TV network Epix from partners Lionsgate, Viacom and Paramount Pictures. Barber revitalized the “James Bond” franchise with box office hits Skyfall and Spectre. The next installment — Bond 25 — is slated for release in 2019.
Barber hired reality TV whiz Mark Burnett (“The Voice,” “Survivor,” “Shark Tank”) as president of the TV group and digital.
In home entertainment, Barber distributed MGM’s vaunted catalog and new releases to the highest bidder, with 20th Century Fox Home Entertainment winning rights to Spectre, Skyfall, Death Wish, Every Day, RoboCop, Poltergeist, “Vikings,” “Get Shorty,” “The Handmaid’s Tale” and “Teen Wolf,” among others. The Fox agreement expires June 30, 2020.
Notably, Universal Pictures Home Entertainment will distribute Bond 25 in packaged media thereafter. The studio’s parent, Comcast recently inked a direct-access deal with Epix for its cable operations.
Sony Pictures Home Entertainment distributes the “Jump Street” franchise and The Magnificent Seven, while Warner Bros. Home Entertainment distributes the “Hobbit” trilogy, Creed, Max, Me Before You, Tomb Raider and Everything, Everything.
Paramount Home Media Distribution has DVD/Blu-ray rights to Sherlock Gnomes and Ben-Hur.
Regardless, home entertainment revenue in 2017 dropped 55% to $91.9 million from $206.5 million in 2016.
Hardly enough to pay off Barber.