PHILADELPHIA (Reuters) - A bidding group headlined by
Comcast Corp. (CMCSA.O), the biggest U.S. cable operator, will join the investors working with Sony on the deal, a source close to the discussions said.
Comcast could not immediately be reached for comment.
Sony and its partners will pay $12 a share for MGM and assume slightly less than $2 billion in debt as part of the agreement, sources close to the deal said.
MGM's library of more than 4,000 films, including the James Bond, Pink Panther and Rocky movies, is considered its crown jewel -- one that could generate solid revenue for a new owner that could reformat the films for sale in the hot DVD market.
MGM's film studio is considered a less-sparkling asset that sources have said may ultimately be shut down.
The consortium, which also includes lead private equity investor Providence Equity Partners, Texas Pacific Group and an investment arm of Credit Suisse First Boston, proposed exclusive talks to finalize the agreement, the sources said.
Sony and its partners have paid a $150 million deposit that MGM will keep if a deal is not reached, the sources said. The group had held a period of exclusive talks with MGM in May that did not result in an agreement.
TIME WARNER UNABLE TO AGREE PRICE
Time Warner, the world's biggest media group, had offered a lower but more straightforward bid of $4.6 billion, according to a source close to the talks. Before Sony raised its offer, sources had said MGM favored Time Warner's bid.
But Time Warner said in a statement on Monday that while MGM was a valuable asset, it could not agree on a price ``that would have represented a prudent use of (Time Warner's) growing financial capacity.''
Time Warner's decision to drop its bid once Sony upped the ante likely came as no surprise to many investors and analysts, who had expected the company to be prudent with its cash after a few painful years of debt-slashing and restructuring.
Time Warner's decision frees it up to concentrate on the
pending auction for bankrupt cable operator
The Adelphia auction is soon to get under way, though the company's books have not yet gone out and Time Warner Chief Financial Officer Wayne Pace said last week that it had not performed due diligence on the assets.
Time Warner already owns the Warner Bros. and New Line Cinema studios. Sony bought Columbia Pictures in 1989 for $3.4 billion, but big spending budgets and fizzling box office takes caused Sony a string of subsequent headaches.
Sony and its partners have now locked in financing from Credit Suisse First Boston (CSGN.VX) and J.P. Morgan Chase & Co. (JPM.N) for the bid, sources close to the discussions said.
Shares of MGM were up 41 cents, or 3.7 percent, to $11.52 in afternoon trade. Shares of Time Warner were down a penny at $16.50.