MGM Reports Strong 2016 Results Despite ‘Ben-Hur’ Losses

Ben-Hur
Courtesy of Paramount Pictures

MGM Holdings Inc., the parent company of Metro-Goldwyn-Mayer Inc., has reported 2016 results that were 3% above the guidance it issued in September for adjusted EBITDA.

The studio said Wednesday that its results include $61 million of film impairment charges, mainly for “Ben-Hur.” The remake of the 1959 hit carried a $100 million budget and grossed a disappointing $94 million worldwide.

“MGM delivered another year of strong financial results,” said MGM chairman and chief executive officer Gary Barber. “Our overall performance was bolstered by the tremendous growth we achieved in our television business, which more than doubled in 2016. The increasing diversification of our premium content, combined with our extensive library and sound financial stewardship, puts us in a very favorable position to continue to deliver reliable financial performance and execute on our strategic growth initiatives.”

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The company posted total revenue of $1.2 billion, adjusted EBITDA of $401 million and net income of $156 million. The adjusted EBITDA margin of 34% topped expectations of 30% for the year.

MGM’s television business generated $134 million of adjusted EBITDA before overhead, up 125% over 2015 following the acquisition of United Artists Media Group.

Revenue for 2016 was $374 million lower than the prior year primarily due to the worldwide theatrical release of “Spectre” in the fourth quarter of 2015.  Revenue for 2016 benefited from the company’s expanded television business following its acquisition of UAMG in January 2016, plus growth in net revenue from co-financed films due to the successful performance of “Me Before You,” “Creed,” and “Max.”

Adjusted EBITDA from television content grew $75 million, or 125%, over the prior year as a result of the acquisition of UAMG, deliveries of new seasons of “Vikings,” “The Voice,” “Survivor,” “Shark Tank,” and several other shows, plus significant international SVOD revenue from “Vikings,” “Fargo,” and “Teen Wolf.”

Net income of $156 million for 2016 was down $96 million versus the prior year due to the one-time income tax benefits recognized in 2015 primarily related to extra-territorial income exclusions.

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