MGM and “big Six”

MGM used to be one of the “big Six” but, today, the company is facing considerable problems and has dropped to minor-majors level. In actuality, MGM is just recovering after bankruptcy and the company is looking for options to maintain its steady recovery to take its own niche in the market. In terms of the current strategy used by MGM, the company has signed the arrangement with Sony concerning the distribution of over 4,000 films. In such a way, MGM attempts to enhance its position in the market and to gain the support of one of the “Big Six” companies operating in the media industry. Therefore, MGM looks for a close cooperation with Sony to maintain its position in the market and to recover after the bankruptcy but the company should be aware of possible risks associated with this strategy, such as the growing dependence of MGM on Sony and their cooperation.

Nevertheless, the decision of MGM to sign an arrangement with Sony seems to be reasonable taking into consideration that the company has emerged from bankruptcy in December 2010. In such a way, the company is looking for options to secure its position in the market. Naturally, to meet this goal, MGM needs support of a major player in the market, such as Sony. Hence, the decision to make a deal with Sony may be an effective strategy to improve the position of MGM in the market. In this regard, it is worth mentioning the fact that, as part of the agreement between Sony and MGM, “Sony would fund half of MGM’s next James Bond movie, which is planned for release Nov. 9, 2012, and 25% of a potential follow-up” . Moreover, Sony would also release all future films made by MGM and the studio’s already completed movies “Red Dawn” and “Cabin in the Woods,” as well as handle sales of its 4,000-title library on DVD and digital platforms . In such a way, MGM will receive the financial support from the part of Sony to fund its project and maintain its distribution successfully due to the support from the part of Sony.

In such a context, the decision being taken by MGM seems to be correct and effective. Obviously, the agreement with Sony opens larger opportunities for the further business development of MGM. Furthermore, the company will get better opportunities for distribution and, therefore, the company is likely to enhance its position in the market. In addition, Sony is one of the major players in the industry and its support may be crucial for the recovery of the company after the financial problems MGM has recently faced.

The agreement with Sony opens wider opportunities for MGM. Moreover, at the moment, the support of one of the major companies in the industry may be essential for MGM to survive. Without such support MGM may face considerable problems and fail to recover after the profound crisis. What is meant here is the fact that, if MGM fails to fund its current projects, they may stay being incomplete. However, taking into consideration the past experience of the company, it is obvious that such projects as Bond 23 and Bond 24 are likely to bring considerable profits and the company can use them to recover and to improve its financial position as well as to launch new projects .

On the other hand, MGM should take into consideration possible risks associated with the agreement with Sony. To put it more precisely, the company becomes dependent on the support from the part of Sony, whereas the close cooperation with Sony will increase this dependence even more in the future. As a result, MGM may face the problem of losing its independent policies to the extent that sooner or later the company will have to merge with Sony. Sony is apparently in a better position today and it can use its financial potential to force MGM to merge with Sony. In such a situation, the current policy of MGM, which focuses on the maintenance of its financial stability, may lead to the steady decline of the company and its integration into Sony.
To eliminate this risk, MGM should be very careful in its cooperation with Sony. The company should be able to recover after the profound financial crisis. At the moment MGM can use the support of Sony but MGM should be very careful to preserve its independence and ability to conduct independent policies. Therefore, MGM should develop its new projects and steadily shift from close cooperation and co-funding with Sony to independent production.

Thus, it is obvious that the recent decision of MGM to launch large scale cooperation with Sony is justified by financial concerns mainly. However, this decision may have both positive and negative effects on the development of the company.
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Vieira, Mark A. Hollywood Dreams Made Real: Irving Thalberg and the Rise of M-G-M. New York: Abrams, 2008.
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