(Reuters) – The founders of production company Spyglass Entertainment have signed a nonbinding letter of intent to take over management of financially troubled movie studio Metro-Goldwyn-Mayer, a source familiar with the matter said on Wednesday.
The news was earlier reported by the Los Angeles Times, which said that Spyglass founders Gary Barber and Roger Birnbaum hope to have Ken Schapiro, a Hollywood business executive, become MGM’s chief operating officer when they take over the famed studio.
Since early this summer the Spyglass founders have been seen as likely candidates to run MGM, which has about $4 billion of debt.
The letter of intent from Barber and Birnbaum was signed in the past several days, and the studio’s debt holders and board of directors must approve the deal, the source said.
The Los Angeles Times said MGM would also need to file a prepackaged bankruptcy before the Spyglass pair can assume control.
MGM has a film library that includes the James Bond and Pink Panther franchises, but it has been struggling to create new hits. It is also coping with plunging DVD sales as consumers move to viewing online.
The studio was also saddled with debt from a $2.85 billion buyout in 2005 by a group that included private equity firms Providence Equity Partners, TPG, Quadrangle Group and DLJ Merchant Banking Partners, and media companies Sony Corp and Comcast Corp.
A representative for Spyglass declined to comment.
By Alex Dobuzinskis
(Additional reporting by Megan Davies: Editing by Steve Orlofsky)