MGM sees classic opportunity in cable
Cable has some entertainment classics of its own, and movie studio Metro-Goldwyn-Mayer (MGM) sees an opportunity to join them.
MGM is buying a 20 percent stake in four of Cablevision 's Rainbow Media's networks: American Movie Classics (AMC), Bravo, The Independent Film Channel (IFC) and WE: Women's Entertainment (formerly Romance Classics) for $825 million in cash.
"MGM is synonymous with entertainment and its film library is unparalleled. This partnership will provide an opportunity to enhance Rainbow's networks, particularly as we move these channels into the digital era. We look forward to developing new opportunities and enjoying a long and growing relationship between the companies," Cablevision Systems Corp. President and CEO James Dolan said in a statement.
According to Alex Yemenidjian, MGM chairman, this is the first of many similar moves on the part of the movie studio.
"This is the first step in MGM's vertical integration strategy in the United States, and it would be a mistake to assume that it will be the last. Among many other advantages, our interest in these cable channels significantly diversifies our sources of revenue," Yemenidjian said in a statement.
Rainbow Media, which manages national and regional cable networks, is 74 percent owned and operated by Cablevision. NBC owns a 26 percent interest in Rainbow. After the MGM transaction closes, Rainbow will continue to manage its programming networks. The transaction is expected to close within the next two months.