As I predicted on DeadlineHollywoodDaily.com, struggling MGM/UA this month delivered its financial statements to its lender group with an unqualified audit opinion along with a certification that MGM is in full compliance with all of its debt covenants. That’s financial speak, which, translated, means that the studio is still a going concern and not about to file for bankruptcy protection in the next few weeks.
Meanwhile, there’s more good news for the struggling studio. I’m told that the Bank of Montreal has come back with a valuation of MGM’s 4,000-plus title library that exceeds the $5.5 billion required under MGM’s term loan. So that library valuation and this audit’s “going concern” opinion will mean no default issues in the near term for the company. But the studio is by no means out of the woods in the long term.
I first reported about the audit of MGM’s activities, especially its TV and movie-production slate, back on May 14 when the studio announced it was taking steps to restructure in the face of a total $3.7 billion in debt due in July 2012. Had the audit gone the other way, then a thumbs-down could have triggered covenants forcing MGM to declare itself insolvent and/or repay its massive debt. In short, all hell could have broken loose.
LETTERMAN TAKES A VICTORY LAP
Here’s an updateto my column from last week: David Letterman posted his largest weekly victory over The Tonight Show since 2000, while last week’s Tonight Show hosted by Conan O’Brien posted its smallest audience since Dave premiered in August 1993. “This does not bode well for the fall,” a CBS exec warned.
Here’s what is worse: Dave’s Late Show also matched Conan’s Tonight Show in adults 25-to-54 years old. Plus, O’Brien scored The Tonight Show’s lowest advertiser-coveted 18-to-49 rating since Letterman premiered on CBS. Even Conan’s margin of strength, ages 18 to 34, has fallen one full ratings point since O’Brien’s premiere week on The Tonight Show.
How is NBC Universal chairman Jeff Zucker going to spin this? Especially after, a few weeks back, an NBC press release called Conan the “King Of Late Night TV”? Looks kinda premature now, huh? Zucker’s mantra that “We don’t need eyeballs as long as we have key demos” doesn’t fly. Actually, both count. Because Madison Avenue knows full well that if they want younger audiences with fewer eyeballs, they can buy ads on cable, which is a hell of a lot cheaper than prime time.