With Buyout Final, Can Mancuso Get MGM in Gear Again?

The $1.3-billion management-led buyout of Metro-Goldwyn-Mayer was finalized Thursday, marking reclusive Las Vegas investor Kirk Kerkorian’s return to Hollywood, this time with Australia’s Seven Network as a partner.

It also begins another chapter in the tumultuous life of a venerable studio that every few years has to pick itself up and start from scratch.

MGM chief Frank Mancuso and his executive team have spent the last three years turning around the moribund movie operation with such hits as “The Birdcage,” “GoldenEye” and “Get Shorty.” Now they have to do it all over again. This time, the challenges may be even tougher.

Seemingly undaunted, Mancuso said he sees nothing but potential opportunities and rewards that were heretofore out of reach for the long-encumbered studio.

“The shadow that has been on the company for so long is lifted finally,” Mancuso said in a phone interview from MGM headquarters in Santa Monica, where the new partners, including Kerkorian and Seven Network Chairman Kerry Stokes, popped open champagne during a ceremonial signing of the sale documents Thursday morning.

Mancuso said that for the first time, he and his colleagues can now look beyond the company’s “short-term survival.”

“This is the end of an incredibly long process which started last December,” he said, referring to when MGM first went on the sales block.

“It’s been a commitment to survive under extremely incredible odds, and for the first time there’s no shadow as it relates to what may happen.”

That said, Mancuso and his team have their work cut out for them.

For starters, a key member of the management team, United Artists President John Calley, is leaving in a month to become the new president and chief operating officer at Sony Pictures Entertainment. Replacing him with someone as seasoned and with equally great talent relationships will be no easy feat.

“I couldn’t be more happy for John, he deserves it,” Mancuso said. “But we will do just fine. We’ve come a long way from three years ago. This company doesn’t rely on any one individual, including yours truly.”

Mancuso said that beginning Monday he will start the task of finding a replacement. “The phone has been jumping off the hook” with recommendations for various candidates from agents, lawyers and others, he said.

Though he has no one specific in mind, Mancuso said he intends to hire an outside executive to run UA rather than combining the unit with MGM Pictures under President Mike Marcus.

“I like the structure. It gives us greater intensity on development,” said Mancuso, who wants to ensure not to overdevelop too many projects under one executive and risk throwing off the ratio of development to production.

Mancuso knows he has to move quickly to restore confidence in the Hollywood community that MGM and UA are once again viable studios.

Since the announcement of the planned sale 10 months ago, MGM has virtually been paralyzed creatively on the movie side. (TV and other divisions such as interactive have not been affected, according to Mancuso.)

“You could not ask talent to do a film for you if you were uncertain you would be there in the future,” he said, acknowledging that the company probably lost out on a number of desirable projects for that reason.

Since production, with few exceptions, virtually shut down for many months, MGM must quickly get movies into the pipeline for release next year.

The last movie to be shot was “Hoodlums,” which wrapped in September for producer Frank Mancuso Jr., son of the studio chief.

Sources said that before the auction, Credit Lyonnais, MGM’s former owner, turned off the money spigot for production. Mancuso denies this.

In any case, he says that since July, when the sale was announced, MGM has been “activating the development slate.” Two movies are set to begin shooting in February: the new James Bond sequel (No. 18 in the series), starring Pierce Brosnan and to be directed by Roger Spottiswoode, and “Red Corner,” starring Richard Gere and to be directed by Jon Avnet. The Bond picture is to be released Thanksgiving of 1997; “Red Corner” is due out the following Christmas.

Mancuso said the plan is to put 12 to 13 movies into production in the coming months, with six releases in the first three quarters of next year and four in the fourth quarter.

In addition to the dozen or so in-house productions, MGM/UA will acquire three to five third-party movies, giving the company a schedule of 16 to 18 titles a year.

There’s been some talk that MGM will not have adequate production and marketing financing because only $350 million of the $800 million lined up by the company’s main banker, J.P. Morgan, has been allocated as working capital. Other major studios have access to at least twice that amount annually.

But Mancuso says that in addition to the $350-million credit line, he expects about $700 million in additional cash flow in the next five years from the 27 films that have been produced during the last three years. He also expects fresh cash flow from the new productions.

If he’s willing to use them, Kerkorian has some of the deepest pockets around. The just-released Forbes 400 list of wealthiest Americans puts his net worth at $3.4 billion.

When asked whether Kerkorian and the other new partners will be willing to fork over more money when needed, Mancuso said, “Whatever we have going on, neither Tracinda [Kerkorian’s holding concern] or Seven came into this to lose . . . whatever it takes to make it a competitor.”

Last year, MGM had a negative cash flow of $310 million. Not so this calendar year, said Mancuso, who’s projecting a positive cash flow “for the first time in a lot of years in the neighborhood of $50 to $75 million.”

Under its new ownership, MGM plans to expand the TV operation, which has five shows on the air, and to explore opportunities in theme parks and destination entertainment centers as well as merchandise and library character tie-ins with Tracinda’s MGM Grand Hotel & Casino in Las Vegas and a planned hotel and casino in Atlantic City.

Seven Network, said Mancuso, “has an ambitious attitude toward the Asian market, which will fit in very well with what we’re doing.” MGM Gold, a new satellite channel featuring MGM/UA movies and TV shows, is being launched in Asia and various parts of Europe and Latin America.

“Whenever There Is Love” . . .

You can bet all the executives at MCA Inc. will sit through the credits when they screen Universal Pictures’ upcoming Sylvester Stallone action film, “Daylight.”

The film ends with the Donna Summer-Bruce Roberts duet “Whenever There Is Love,” the title track produced by pop wizard David Foster and written by Roberts with songwriting partner Sam Roman. And who is Sam Roman? Turns out it’s a pseudonym for lyricist Edgar Bronfman Jr., who as chief executive of Seagram Co. bought MCA last year.

Last year, Roberts released his fist compact disc, with three songs written by Bronfman under the pen name Junior Miles. When that cover was blown, Bronfman chose the new name. Bronfman couldn’t be reached for comment Thursday, but Roberts said “Sam” comes from grandfather Samuel Bronfman, founder of the Seagram spirits empire, and “Roman” is a code name Bronfman has used in the past. Roberts said he believes it derives from Bronfman’s wife’s family.

So did Edgar have the inside “track,” so to speak, on winning the theme song for “Daylight”? Not according to Roberts and a batch of MCA executives.

They claim the choice was entirely the decision of “Daylight” director Rob Cohen, who supposedly selected the ballad out of dozens of others submitted to him without any prior knowledge of the mystery songwriter.

The real question is when Oscar and Grammy times roll round, will the real Sam Roman stand up?