Revenue up to $295.4 million
Income from the latest James Bond video helped Metro-Goldwyn-Mayer post its fourth consecutive quarter of profitability, the company said Wednesday, as the rebounding studio hit analysts’ projections for the second quarter with net profit of $6.3 million that compared with a year-ago loss of $249.8 million.
Revenue for the latest quarter was up 39% to $295.4 million. But it was the bottom line’s consistent return to the black after long-running periods written in red that had execs almost giddy in a conference call with analysts and press held to discuss the results.
“We’ve just reported our fourth profitable quarter in a row, and it’s been 14 years since MGM has had this sort of performance,” chairman and CEO Alex Yemenidjian said. “The turnaround of MGM is completed. We’re not in Kansas anymore.”
Full schedule lies ahead
Yemenidjian, who took over from Frank Mancuso in April 1999, said the studio’s business plan calls both for “organic growth” and expansion through acquisitions. Meanwhile, the studio’s film slate, with some 19 pictures in development, is more robust than any at the studio “since the days of Louis B. Mayer,” he said.
Vice chairman and chief operating officer Chris McGurk noted a Hollywood trend in which studios have been making ever-fewer movies each year and boasted, “We are the only studio ramping up production.”
Senior executive VP and chief financial officer Dan Taylor made a more modest claim when he noted, “There were no film write-downs in the second quarter.”
In the second quarter of 1999, box office flops had contributed to the swell of quarterly red ink, even as a paucity of significant film development caused concerns over cash positions at the studio. In the latest quarter, operating income hit $18.2 million, compared with negative cash flow a year ago of $227.5 million.
Still, Yemenidjian acknowledged a still-unfulfilled pledge to strike strategic alliances in areas including the creation of themed cable channels based on the MGM library. But he said the studio wants to do multiple deals of such with various partners and has had to proceed cautiously to ensure that the initial deals don’t prohibit the striking of additional strategic ones down the road.
On the film side, McGurk noted the implementation of a new emphasis on co-production deals that feature a co-financing element. Such agreements include a multipicture pact announced in May with Atlas Entertainment for films including the summer 2001 release of an update of the 1975 action film “Rollerball.”
Another co-production deal features a 10-film slate from Francis Ford Coppola’s American Zoetrope for MGM’s United Artists specialty division, including the newly announced “Monster” from writer-director Hal Hartley.
Four MGM releases set for the balance of this year include “Breakers,” topped by Gene Hackman and Sigourney Weaver, and Tim Robbins starrer “Antitrust.”
And the studio’s 2001 includes the Ridley Scott-helmed “Hannibal,” with Anthony Hopkins reprising his role as the cannibalistic serial killer Hannibal Lecter in the MGM-Universal co-production.
“Basic Instinct 2,” with a returning Sharon Stone, will be released either in 2001 or 2002, Yemenidjian said.
“Suffice it to say these guys are doing the right things to manage the company well and run it in the interests of the shareholders,” said analyst David Miller of Sutro & Co. in Los Angeles. “And it’s apparent in their release slate.”
Offered analyst Arthur Rockwell of Rockwell Capital Management in Los Angeles: “MGM has been on a bottom-line binge, and it’s working for them.”
007 delivers at home
MGM, which recently shucked its home entertainment distribution deal with Warner Bros. and enjoyed its first full quarter of self-distribution of domestic video and DVD releases, saw its Bond title “The World Is Not Enough” vie among the quarter’s top-selling titles in both formats. Also, a second collection of six other Bond titles, many new to DVD, were released during the period.
“DVD sales alone were up more than sevenfold in the period,” Taylor said, “and not just because of Bond titles.” Other releases during the quarter included “Ronin” and “Stigmata.”
Over six months, MGM reported a profit of $11.5 million, compared with a loss of $556.4 million in the same period of the previous year. Six-month revenue rose 36% to $640.2 million.
MGM shares Wednesday rose 25¢ to close at $23.75.