Homevid, TV help cut MGM losses before tie-up
MGM made up for a weak summer at the box office with strong homevideo performance and increased television revenues to cut its net loss in the third quarter.
Despite an overall revenue drop of 12% to $401 million, studio rode lower costs to an 18% decline in its net loss to $27 million. Net loss included a $3.8 million charge related to the pending acquisition and $8 million in expenses for employee stock options.
Performance continued a recent trend at MGM, which has lost money in the first three quarters and made a profit only during the holiday season for the past several years.
Lion’s new releases fared poorly in the quarter, with both “Sleepover” and “Wicker Park” petering out at less than $10 million, although studio said limited release “De-Lovely” would be profitable soon after hitting homevideo.
MGM had a better time in home-video, though, where unit shipments increased 30% over the same quarter a year ago. “Walking Tall,” “Agent Cody Banks 2,” and “Barbershop 2” were its best new performers, with re-releases of “The Good, the Bad, and the Ugly” and “The Manchurian Candidate” faring well in the library.
Strong performance for its “Stargate” skeins on Sci Fi and expansions of overseas MGM Networks helped studio’s TV revenue grow 11% to $69 million.
Film rev dips 17%
Feature film rev, which includes box office and DVDs, fell 17% to $321 million.
“Our film, television, MGM Networks and home entertainment operation are all on track to finish the year strongly,” said chief operating officer and vice chairman Chris McGurk.
Exec also pointed to what could be a stronger slate of new releases in 2005 for the Lion, including “Pink Panther,” “Be Cool,” “Amityville Horror” and “Beauty Shop.”
For the holiday season, MGM is relying primarily on specialty label United Artists’ “Hotel Rwanda.”
MGM and its majority shareholder Kirk Kerkorian reached an agreement with a consortium of investors led by Sony and including Comcast to be acquired for nearly $5 billion in August. MGM’s board approved the acquisition in September.
Deal is not expected to close until mid-2005, however, and MGM will continue to operate in the meantime as an independent company.