Hollywood blockbuster prospects are bleak, hedge funds want to abandon the “James Bond” series

2020 is the worst year for Hollywood blockbuster releases, leaving analysts debating whether there will be a movie theater industry for audiences to return to once COVID finally goes away (assuming that day will come).

MGM Holdings, the studio responsible for the James Bond franchise, has hired Morgan Stanley and LionTree (known for its media franchises) to explore a sale, affirming months of speculation that its largest shareholder, Anchorage Capital Group, could be forced to push for a sale as disgruntled investors pull out, according to the Wall Street Journal.

Anchorage bought MGM in a deal back in 2010, when the studio was emerging from bankruptcy and its creditors, including a group of hedge fund creditors, became shareholders.

The studio’s private value is believed to be $5.5 billion, essentially the value of the “Bond” film franchise, sources told the Wall Street Journal.

It’s unclear what kind of return Anchorage’s stake, believed to be about 14 percent, might bring to the fund. Currently, the company is believed to own a $1 billion stake in MGM, equivalent to about 14% of its 8BN+ AUM.

But such illiquid holdings have been a drag on returns in recent years, and some big investors have been complaining.

According to another report published earlier this year by The Wall Street Journal, Kevin Ulrich, founder of Anchorage and chairman of MGM, has said that heavyweight investors including Amazon, Apple, Comcast and even Facebook have expressed interest in MGM.

But with the release of the next Bond film, “Live and Let Die,” reportedly delayed until April 2021, Ulrich believes now may be the best time to sell because a new buyer could influence the marketing and promotion of the film.

The timing is also telling, as a Biden presidency would likely mean closer economic and political ties with China. Chinese investment firms have, in the past, shown a willingness to pay a premium for U.S. studios and not have to worry about the Trump-era Committee on Foreign Investment in the United States (CFIUS) sweeping up cross-border deals.