Yesterday TheOneRing.net scotched rumors that The Hobbit has been greenlit and is planned to be 3D. Guillermo del Toro had given an conference-call interview about Splice, a horror film he co-executive-produced. Today the full text of the interview went up on “Shock Till You Drop” with additional quotations from GdT:

Question: Do you know when production is going to begin on The Hobbit and when you’re actually going to get onset?

Del Toro: There can’t be any start date, really, until the MGM situation gets resolved because they do hold a considerable portion of the rights and it’s impossible to make a unilateral decision by New Line or Warner. We really believe that dates will be known after the fact of MGM’s fate. Whether they stay and get supported or they get bought or they transfer some of the rights, nobody knows. We’ve been caught in a very tangled negotiation. Now I’ve been on the project for nearly two years. We have designed all the creatures. We have designed the sets, the wardrobe. We have done animatics and planned very lengthy action sequences. We have scary sequences and funny sequences and we are very, very prepared for when it’s finally triggered, but we don’t know anything until MGM is solved.

Question: Just to absolutely clear, the story that was reported earlier that The Hobbit has been greenlit for 3-D, that is false?

Del Toro: In both counts, there is absolutely no final answers. It’s not greenlit. That’s categorical. It’s not greenlit. 3-D has been discussed literally once in the room. The budget and the schedule and everything we’re handling – the cost of the film and the number of days it would take to shoot – is being handled right now without looking towards 3-D. Is there a chance it would become 3-D in the future? Maybe. But right now it’s not being planned as such.

This confirms that a lot of progress has been made on the preparations for the filming. I’m not keen to see The Hobbit made in 3-D, since the idea is to make it blend smoothly in as a lead-in to the LOTR trilogy, so I was happy to hear that 3-D seems unlikely to be used.

The MGM financial crisis seems to be more involved in the delay in the greenlighting of the film than I would have expected. I’ve been assuming that the contract between Warner Bros./New Line and MGM would have been full of contingency measures to be taken in such a situation–especially given that the latter studio’s debt problems were well known. At this point, we can but wait. At least it’s good to hear from Guillermo after a long silence on the part of the filmmakers, who obviously are forbidden by their contracts to talk freely about the situation.

TheOneRing.net has alerted us to an LA Times story from May 24 that suggests a tangled situation indeed as MGM’s debtors try to find someone to take charge of restructuring the studio.

So it’s interesting to read a contrasting story posted yesterday by Variety that gives us some information about a question that has occurred to many of us: How has MGM kept operating during these tough times? What pays the bills?

Its major source of income, it turns out, is television. Though feature filmmaking has become almost moribund at MGM, its TV division is forging ahead:

Even as the Lion faces a very uncertain future, execs on the TV side of the studio are quietly working to set up new business and expand existing ventures, such as the This TV digital movie service. Feature activity at MGM is largely in limbo, save for a handful of long-gestating projects, because of the studio’s debt crisis and larger financing commitments required by movies.

But Jim Packer and Gary Marenzi, the industry vets who are co-presidents of MGM Worldwide TV, are still actively hunting for deal opportunities and partnerships to keep some level of activity going at the studio while its long-term situation is sorted out by the steering committee of creditors who hold the bulk of MGM’s $3.7 billion in outstanding debt.

Last week, MTV ordered 12 hourlong episodes of a smallscreen rendition of the Lion’s 1985 cult-fave pic “Teen Wolf,” to be co-produced by MGM and MTV, with MGM controlling worldwide distribution rights. The “Teen Wolf” pilot is being screened for international buyers in town this week for the L.A. Screenings.

On Tuesday, MGM announced a carriage extension agreement with Tribune Broadcasting for its 18-month-old This TV service, a 24/7 movie channel designed to be carried by local broadcast TV stations as a digital multicast offering. MGM was the most aggressive of Hollywood’s majors in developing a programming service for local stations as the nation made the transition to all-digital broadcasting.

This TV started slowly in its November 2008 debut, but it has since been picked up by stations covering about 85% of U.S. TV households. The new pact with Tribune gives This TV a clearance in New York for the first time, via Tribune WPIX-TV, as well as expanding to other Tribune stations in Miami, St. Louis, San Diego and Grand Rapids, Mich. The channel is also getting significant carriage on cable systems, as local stations push for the inclusion of their This TV subchannel as part of retransmission consent deals with cable operators.

MGM continues to produce new segs of the “SGU Stargate Universe” drama for Syfy. And execs are actively mining the Lion’s extensive film and TV library for remakes and reboots along the lines of the “Teen Wolf” model. MGM’s Chris Ottinger spearheaded the packaging and sale of the project to MTV.

MGM’s dealmaking ability is certainly compromised by the cloud of the debt problem that became acute for MGM late last summer, and the auction process that drew underwhelming bids from a handful of suitors. But Packer’s focus is on making the most of what they’ve got — and with a library of 4,100 pics and 10,000 hours of TV programming, they’ve got a fair amount to work with.

MGM also has TV assets abroad: “Beyond U.S. shores, the Lion has MGM-branded movie channels operating in 130 countries, with an aud base of about 75 million. It’s a steady source of income that has helped keep the lights on for Leo during its most recent rough patch.”

All this doesn’t mean that the filmmaking side isn’t in a messy state. Still, it’s nice to know that MGM isn’t a complete basket case.

Many thanks to Paulo Pereira for alerting me to a story just posted by the Wall Street Journal. It indicates that MGM’s creditors may be putting together a solution to the studio’s dire financial state. I’m no expert on business practices, so I’ll present the text without comment:

WSJ: MGM’S CREDITORS NEAR CHOICE ON PARTNER

May 18, 2010

Mike Spector and Lauren A. E. Schuker

Metro-Goldwyn-Mayer Inc.’s creditors are nearing a choice on a possible strategic partner, a move that could break the logjam over how to resolve the studio’s crippling $4 billion debt load.

The creditors’ current plans would replace at least some of MGM’s top executives, according to several people familiar with the matter, though they added no final decisions have been made.

The creditors, led by J.P. Morgan Chase & Co. (JPM) and hedge-funds Anchorage Advisors and Highland Capital Management, have had discussions with a handful of Hollywood executives about running MGM in exchange for an equity stake in the iconic film studio, these people said.

Those having discussions with MGM’s creditors include Summit Entertainment, Spyglass Entertainment and former Yahoo Inc. (YHOO) executive Terry Semel, these people said. The creditors have also spoken with former News Corp. executive Peter Chernin, although people close to the mogul say he’s not interested in running MGM.

Choosing a strategic partner to run the company would likely lead to a reshuffling of the studio’s top ranks, including Mary Parent, ostensibly MGM’s top executive. She shares a new “Office of the CEO” with turnaround specialist Stephen Cooper, who was brought on by MGM’s owners in August to help restructure the studio. He’s expected to leave once MGM’s restructuring is finished.

Creditors believe that a partner with expertise in the entertainment industry can help MGM produce a new slate of movies that could then breathe new life into its film library-its most valuable asset. MGM told creditors it needs $1 billion in fresh capital for new films, but the lenders haven’t signed on to that proposal and are still mulling how much new money the studio needs. A strategic partner wouldn’t necessarily provide new money, people familiar with the matter said.

The discussions, while serious, remain fluid, these people said. None of the potential partners has committed financing for MGM.

MGM declined to comment.

Private-equity firm Cerberus Capital Management owns Spyglass, which cofinanced recent hits “Star Trek” and “G.I. Joe.” Summit, the studio behind the lucrative “Twilight” vampire franchise, is backed by private-equity firms in addition to other investors.

MGM’s creditors plan to meet with studio management soon to quiz them on different plans proffered by the possible partners, said a person familiar with the situation.

MGM received a waiver on debt payments from creditors until July 14, its fifth reprieve since November. A recent auction failed to produce bids high enough to placate MGM’s creditors, many of whom want to recoup more than $2 billion.

MGM is still exploring a roughly $1.5 billion bid from Time Warner Inc. (TWX), but MGM’s creditors have signaled they’re no longer interested in parting with the studio.

The creditors now plan to take over MGM through a debt-for-equity swap, most likely through a streamlined bankruptcy process that would garner approval from many creditors before a court filing.

While numerous details of the creditors’ plans remain uncertain, their leading scenario involves bringing aboard a strategic partner to run the studio and receive an equity stake, one of the people familiar with the situation said. The creditors would own the rest of the studio after converting some or all of their debt to equity. The new partner could produce, market and distribute MGM’s films, said the person familiar with the situation.

However, they still need to raise fresh funds. “Some capital has to be put up by somebody,” said a person familiar with the situation.

According to Variety, MGM announced today that its creditors have given it a fifth extension allowing it to delay principal and interest payments on its $3.7 billion debt. The new deadline when the payments are supposed to resume is July 14. The company now faces a choice between soliciting further bids–and at this point Time Warner is the only company with an active bid in–and going through a “pre-packaged” bankruptcy.

This story adds a couple of details to its previous coverage: “A bankruptcy filing would likely take several months and likely result in laying [off] some of its 400 staffers.”

According to Variety, MGM has gone ahead with its anticipated request for a fifth delay in payments on its debt. The fourth delay expires this coming Friday, May 14.

The story goes on:

The announcements haven’t addressed what steps MGM may take next — whether it will seek another round of bidding or recapitalize itself, probably through a pre-packaged bankruptcy.

In the meantime, the uncertain outlook’s led to a reduced role for MGM in Hollywood. Lion agreed in early April to have Sony handle the global theatrical distribution for “Zookeeper,” which the studios co-produced; and producers Michael G. Wilson and Barbara Broccoli announced several weeks ago that they’ve put plans on hold for the next James Bond pic due to the “continuing uncertainty surrounding the future of MGM and the failure to close a sale of the studio.”

Time Warner CEO Jeff Bewkes said last week that buying MGM “could make good sense” at the right price. Bewkes made the announcement during a conference call to discuss first-quarter earnings.

MGM carries debt of $3.7 billion. Its assets include its name and logo, the United Artists operations, a library with more than 4,000 titles, the James Bond franchise, half of “The Hobbit” franchise and a bare-bones film and TV operation.

The part about MGM agreeing to have Sony distribute The Zookeeper internationally raises an interesting possibility. MGM has co-produced this film with Columbia, which is owned by Sony. In this case, the film in question is well into the production process, perhaps already in post-production.

It would seem quite possible for MGM to arrange for Warner Bros. to finance The Hobbit on its own and then distribute The Hobbit worldwide, in exchange paying a percentage of the revenues to MGM.

If the Variety story’s speculation is correct, MGM’s situation has left its creditors with two options: sell the company (with Time Warner being the only potential buyer at the moment) or restructure itself through bankruptcy. If a company is up for sale, it typically doesn’t dispose of assets, since that would affect its value and hence its selling price. So selling the distribution rights to The Hobbit has not been a viable option.

If Time Warner buys MGM, obviously it gains control of those rights. If bankruptcy becomes the solution of choice, then selling or leasing the distribution rights to Warner Bros. might become feasible. In fact, it is also quite possible that MGM allowing WB to distribute worldwide in exchange for a cut of the take is a contingency clause already in the contract concerning The Hobbit that WB and MGM agreed upon. Surely some such contingency measures exist in that contract, which would most likely kick in if MGM goes into bankruptcy.

Variety announced today that Access Industries, the only company besides Time Warner still in the competition to buy MGM, has withdrawn its bid. The story goes on to reiterate the news that I posted yesterday: “MGM’s prospects received some positive news on Wednesday when Time Warner CEO Jeff Bewkes said an acquisition of MGM ‘could make good sense’ at the right price. Bewkes made the announcement during a conference call to discuss first-quarter earnings.”

There’s no indication whether there is any causal relationship between the Bewkes comment and Access Industries’ withdrawal.

I recently returned from Egypt and was intending to write up a summary of what I saw as the key events of the month when I was gone. But now there’s a breaking story to report, so I’ll do that first and then write up the summary. This morning TheOneRing.net linked to a May 5 Hollywood Reporter story about MGM being given yet another extension of its deadline to pay over $400 million in interest and principal. The proposal for a new deadline will be voted on this coming Monday, but it’s expected to pass.

The story summaries the players in the ongoing battle to sell or restructure MGM and concludes “Time Warner—which topped bidders in the failed MGM auction with a $1.7 billion offer—isn’t interested in partial ownership. The Warner Bros. parent could re-engage with the Lion in talks regarding a modestly increased bid for the entire studio, but that’s considered a long-shot scenario.”

Today, though, Variety reports that Time Warner CEO Jeff Bewkes (who made the decision to downsize New Line and make it a production unit of Warner Bros.) has said that “an acquisition of MGM ‘could make good sense’ at the right price.” This comes in the wake of yesterday’s announcement, also covered in Variety, that Time Warner’s profits for the period January to March rose 10% over the same period in 2009.

The rise came largely from the DVD sales of The Blind Side and Sherlock Holmes and the advertising recovery to Turner Broadcasting and Time Inc.

The story continues, “As for MGM, Time Warner had about $5 billion in cash at the end of March and is evaluating various ways to use it. If the Lion fits the bill, ‘we’re not averse to putting some of that capital to work,’ Bewkes says.”

The story also mentions that Rupert Murdoch has said he isn’t interested in making MGM part of his News Corp. empire.

I find it difficult to believe that Bewkes would be making remarks about buying MGM to the press if there hadn’t already been extensive negotiations behind the scenes. It’s also hard to believe that he’d say such things if he weren’t seriously considering the purchase. I’ve remarked here before about what a good year Warner Bros. had in 2009, and Bewkes may be signaling the stockholders in Time Warner that he’s not going to let all that accumulated cash sit around earning nothing beyond current interest rates.

Thus the possibility that the production and distribution rights to The Hobbit may at last be united within a single studio seems much more alive than recent MGM news has led us to think.