MGM PROPOSAL – MAJOR ISSUES
The following are MGM's positions on some major deal points in the proposed deal. Gary said that the points marked with ** were non-negotiable.
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**Bond Pictures: SPE gets Bond pictures only if produced during 5 year term. [Our position was a guarantee of 2 Bond pictures.] SPE finances 50% of production costs (approx. $180M) and distribution expenses (approx. $175m), distributes for no fee and gets 25% of profits. [Our position was 8% fee if we invest 25% or 5% fee if we invest 50%, with profit share equal to our percentage investment.] MGM will waive 5% of gross Rights Fee.
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** Girl With Dragon Tattoo and Sequels. MGM has right to finance 50% and distribute international TV on "Girl" and all sequels, in addition to Total Recall [which we had already offered].
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MIB 3. MGM to have right to finance 25% and wants to discuss distribution.
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Co-Finance of Other SPE Productions.
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SPE must offer MGM option to co-finance 4 other pictures per year commencing 1/1/12. [We said 3 pictures per year.]
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MGM has the right to distribute international TV on 2 co-financed pictures per year [We said 1 picture per year plus 1 extra picture in 2013]
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MGM also has the right to distribute US/Canada free TV on one of the pictures on which they have international TV [This is new.]
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MGM turned down our request to guarantee that their TV revenues would be no less than our greenlight model
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**Distribution Fees.
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Bond Films – No fee. [We said 8% fee if we invest 25% or 5% fee if we invest 50% ]
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SPE Films Co-Financed by MGM – 8% fee to SPE, 8% fee to MGM [We said 9% to SPE, no fee to MGM.]
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Non-Bond MGM Films Co-Financed by SPE – 8% fee to SPE, 8% fee to MGM [We said 9% to SPE, no fee to MGM.]
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MGM Rent-a-System Films [which MGM has the right to put to us] – 8% fee to SPE [We said 10% fee to SPE.]
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**MGM Distribution Approvals. MGM to have approval over the theatrical and home video release dates for Bond movies and the total P&A spend for all co-financed pictures (i.e., the right to set a cap). [This is new.]
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**Home Video Distribution. Home video distributor must pay a minimum guarantee. [This is new.] Gary indicated that it might be okay for us to pass on home video distribution and take the rest of their deal, but if we pass we can't have video distribution on Bond pictures or other co-financed MGM films.
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