Kerkorian Replacing MGM Chairman in Management Shake-Up

Kirk Kerkorian is turning the management of his struggling Metro-Goldwyn-Mayer upside down, replacing studio Chairman Frank Mancuso with his key aide and closest confidant, MGM Grand President Alex Yemenidjian, sources said Monday.

Kerkorian is continuing negotiations with Universal Studios to recruit President Chris McGurk as vice chairman to succeed Robert Pisano.

MGM is expected to formally announce today that Yemenidjian will replace Mancuso and that Pisano is out. Mancuso and Pisano, who previously worked together at Paramount Pictures, have been at MGM since 1993.

The impending restructuring, first reported Monday in the Hollywood trade papers Variety and the Hollywood Reporter, comes after repeated denials by MGM that its billionaire owner was planning a sweep of the studio’s top management.

As of late Monday, a deal had not yet been finalized with McGurk.

Yemenidjian has been quoted as saying that Kerkorian does not want to sell the beleaguered studio at this time. But the changes at the top suggest an attempt by the 81-year-old Kerkorian to turn things around as quickly as he can in order to extract a higher price for MGM when the day comes to unload it.

Kerkorian bought MGM for the third time in 1996 and now has more than $2 billion invested in it.

The appointment of Yemenidjian, 43, who resides in Las Vegas and is an executive of Kerkorian’s private holding company, Tracinda, is widely viewed as an interim move.

MGM has held discussions with a number of media companies, including Cablevision Systems and Liberty Media, about potential distribution partnerships. MGM has also talked to such studios as Universal, Disney and Fox about striking an international home-video deal.

McGurk, who declined comment Monday, could be helpful in securing such business arrangements. He has asked Universal for early release from his contract, which doesn’t expire for more than two years.

Seagram Co.-owned Universal is said to be considering doing so if it can extract certain business considerations from MGM, possibly including worldwide home-video rights to its movies.

For McGurk, MGM’s allure is twofold: He gets to run a studio, with movies, television and marketing/distribution reporting directly to him (no creative division answers to him at Universal); and he can make a financial killing if and when MGM’s stock improves and when the studio gets sold.

In 1990, Jeffrey Barbakow, a former Merrill Lynch investment banker whom Kerkorian installed as the president of MGM/UA, pocketed $20 million after two years on the job when he helped engineer a $1.3-billion sale of the company to Italian financier Giancarlo Parretti.

McGurk would undoubtedly make changes in the production ranks at MGM/UA, which has had a dismal box-office record with such recent flops as “The Mod Squad,” “The Rage: Carrie 2” and “At First Sight.”

It’s unclear who Universal would tap to replace McGurk, who has both operating and business responsibilities at the studio, including international video, but sources say it is likely his duties will be redistributed internally among various executives.

Mancuso, who has headed MGM since 1993, has tried to lead Hollywood to believe he was helping Kerkorian look for an eventual successor but was in no particular hurry to do so since his contract didn’t expire until 2001. He’s expected to receive a settlement package exceeding $10 million.

MGM shares jumped $1.31 to close at $15.81 on the New York Stock Exchange.