Sony makes a $5 billion bid for MGM

Japanese giant Sony has launched a $5 billion takeover bid for film studio MGM, which if successful would see the firm taking ownership of some of Hollywood's most valuable film properties - including the James Bond franchise.

The bid, which is thought to be backed by buyout financiers Providence Equity Partners and Texas Pacific Group, would see Sony acquiring MGM from octogenarian deal maker Kirk Kerkorian - who owns 75 per cent of the studio, and has bought and sold it three times since 1969.

Buying MGM would give Sony control over the company's library of some 4,000 films, including franchises such as James Bond, Rocky, Robocop and the Pink Panther (a franchise which it hopes to revive next year with a new movie starring Steve Martin) and would make Sony Pictures into the single largest market share holder at the US box office, based on figures for 2003 and 2004 to date.

Seen in the context of the company's current movements in the consumer electronics and games industries, the purchase could be even more important. Sony is due to launch the PlayStation Portable at the end of this year, offering movie playback off a new media format, UMD - and for this to take hold, software support in the form of UMD movie releases is crucial.

Buying MGM would deliver a back catalogue of thousands of movies, and over ten thousand TV series episodes (including the hugely popular Stargate SG-1 series), which in addition to Sony Pictures' own catalogue - largely inherited from the buyout of Columbia Tristar several years ago - could give the company enough of a critical mass to get UMD off the ground all on its own.

Of course, the deal would also deliver a number of key videogame franchises to the Sony corporate machine, most notably the James Bond franchise - but existing contracts for the creation of games based on those properties (and in some cases, competition laws) make it unlikely that they would become PlayStation exclusive as a result, at least not in the near future.

Sony's bid for MGM is far from a done deal, however. Although the Japanese giant is reportedly in very deep negotiations with Kerkorian and MGM, its bid has apparently renewed interest in the 80-year-old studio from the world's largest media company, Time Warner. Should Time Warner actually decide to make a formal bid for the studio, it's likely that negotiations could drag on for several months.