In an unexpected move, MGM today entered negotiations with Warner Bros. for an early termination of its distribtuion agreement. As you certainly know, all MGM home video titles, including DVD, are currently distributed through Warner Bros. and the contract officially ran until May 2003.

Since MGM is now exercising rights over the largest film libraries in the industry with well over 5,000 titles, it is becoming more important for the company to have full control over the assets. “We are trying to have all MGM, United Artists, Orion, and Polygram library products under an internally managed organization in order to become the world’s leading content provider,” MGM’s CEO Frank G. Mancuso said.

For an estimated $225 million, under terms of the agreement signed today, all restrictive provisions in the video rights agreement between MGM and Warner Home Video have been terminated, including limitations on the acquisition and disposition of film rights and the requirement that future affiliates of MGM distribute their product through Warner Home Video. In addition, all of the security interests encumbering the MGM library in favor of Warner Home Video have been released. Warner Home Video will continue to distribute MGM’s video and DVD product, under the terms of a transitional distribution agreement from today through January 31, 2000, to facilitate MGM’s conversion to self distribution.