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Report: Lionsgate, MGM Holding Merger Talks

24 Jun, 2010 By: Erik Gruenwedel

Lionsgate and veteran studio Metro-Goldwyn-Mayer are reportedly in discussions about a possible merger, according to a media report.

The merger, according to The Los Angeles Times, would include the assumption of $4 billion in MGM debt, incurred when a consortium of investors, including Sony Corp., acquired the studio. It faces a July 14 deadline on a forbearance agreement with its lenders.

A forbearance agreement is an agreement to postpone, reduce or suspend payment due on a loan for a limited and specific time period.

Regardless, consummation of a merger would be appear tricky with Lionsgate currently fending off a hostile takeover bid by shareholder Carl Icahn, who has made operating costs, including acquisitions of third-party catalog, a pillar of his resentment toward the studio’s management.

Lionsgate earlier this year entertained thoughts of acquiring MGM, which has a vaunted film catalog the Santa Monica, Calif.-based mini-major would seek to exploit on packaged media, video-on-demand and its upstart Epix pay-TV platform, among other channels.

Representatives from Lionsgate and MGM were not immediately available for comment.

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