As you all probably know, MGM Studios recently filed for a possible IPO just under 2 years after filing for bankruptcy protection. The company is likely to use the offering to reestablish itself as a prominent studio, allowing it to actually produce films on its own rather than co-financing with the likes of Warner Bros. and Sony Pictures. Since emerging from bankruptcy, MGM decided to target television and co-financing in order to limit their risk against box office flops. But as we all know, with high risk comes high reward.
In coming months, MGM will see earnings from the success of "James Bond: Skyfall" and "The Hobbit" both co-financed productions. This creates a nice segway to an IPO in either December or January, at a time when the company is attractive in the public eye. MGM has had its hand in several quality films in recent years, most notably "21 Jump Street" (which I found absolutely hilarious). But can it return to the Academy-Award winning powerhouse it once was?
In order to prove that it can be profitable long-term, the company needs to make a splash in the box office (Entourage/Aquaman reference). We’ve seen Zynga (ZNGA) plummet recently due to lack of strong earnings. This comes from their lack of ability to produce new games, as Farmville and Cityville lose traction.
All of this begs the question, should MGM go public? Is the company financial strong or innovative enough to avoid a plunge months or years down the line?
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