Sony captures legendary Hollywood studio

Japanese electronics giant Sony is to buy Hollywood studio MGM for nearly £1.7bn (€2.5bn).

The deal marks the last chapter in the history of two of Hollywood’s most famous names – Metro Goldwyn Mayer, once best known for its musical hits like Singing in the Rain and its subsidiary, United Artists, the studio founded in 1919 by Charlie Chaplin, Mary Pickford, Douglas Fairbanks and DW Griffith.

The agreement is a coup for Sony, which as late as Sunday was considered the underdog in the bidding to Time Warner, which dropped its offer yesterday.

Acquiring MGM’s vast library of more than 4,100 films, including West Side Story, Rocky and Rain Man, boosts the content Sony can now offer on DVD and on portable devices, many of which Sony makes.

Sony also announced that it has reached a distribution deal with Comcast, the largest cable TV provider in the US, that would allow video on demand and new cable channels featuring Sony and MGM content.

With the arrival of broadband in homes around the world, people are increasingly expected to enjoy movies on Internet-linking equipment in their living rooms.

And Sony is hoping the gadgets will be its own.

MGM bought United Artists in 1981 and has used the brand in recent years as a boutique studio, releasing low-budget, independent films.

MGM said it received a cash deposit of £83m (€121.7) from Sony and several private equity companies.

MGM said its management will recommend the deal, which it called a “proposed merger,” to its board by September 27. The sale is also subject to regulatory approval.

The sale would mark the third time billionaire investor Kirk Kerkorian has sold the film studio. He owns 74% of MGM’s outstanding shares and the sale to Sony would net him about £1.2bn (€1.76) .