MGM execs vowed Wednesday to continue diversifying studio operations while maintaining as low overhead as possible in its core businesses.
“MGM’s transformation into a more vertically integrated company is a major priority for us,” chairman and CEO Alex Yemenidjian told shareholders attending an annual meeting in Century City.
“Our vision for MGM is a company that has multiple revenue streams and is growing,” Yemenidjian emphasized.
Vice chairman and chief operating officer Chris McGurk called the Santa Monica-based studio’s cost of doing business the “lowest overhead structure in the business.”
Small and careful
MGM’s overhead and distribution fees amount to a modest 10.6% of revenue, McGurk said. He cited a small film development staff and “very selective and careful” greenlighting process as critical to the studio’s effort to keep down costs.
Meanwhile, Yemenidjian touted MGM’s executive bonus structure as being more bottom line-oriented than other studio companies. “We are appalled that in this industry, most executives are bonused based on market-share and box office,” he said.
Disney won Hollywood’s movie market-share battle last year. Mouse House spokeswoman Chris Castro declined to say whether Disney execs were rewarded for the accomplishment, but she noted that annual bonuses for its top officers are “performance-related” and based on profit-related measures.
Looking for laurels
In any event, it may be some time before MGM can expect to vie for annual B.O. laurels.
Indeed, chief financial officer and senior executive veep Dan Taylor acknowledged that 2000 “was a transitional year for MGM” and featured a smaller-than-usual film release sked.
But execs served up a 20-minute reel of pics planned for 2001-2002. The 100 or so shareholders on hand applauded after being treated to a presentation featuring lengthy segments from summer’s “Rollerball” action-thriller and “What’s the Worst that Could Happen?” laffer, and the first clip of next year’s “Hart’s War,” a prisoner-of-war drama for which MGM holds high hopes.
As for diversifying into new areas from MGM’s core film base, Yemenidjian touted various new international TV channel start-ups as important new profit centers.
“We believe the value of these channels are not yet reflected in our current stock price,” he complained.
Yemenidjian — and MGM majority owner Kirk Kerkorian — are known to be frustrated by MGM’s stubborn stock price, which briefly hovered around $30 several months ago but more recently has languished below $20. The Lion is currently on a campaign to boost the number of Wall Street firms covering its stock, which Wednesday closed up 52¢, or almost 3%, at $19.92.
Yemenidjian pointed to recent deals including the purchase of a 20% stake in four cable channels owned by Rainbow Media as important steps toward diversification. Effectively reiterating the studio’s intent to boost its stake in the webs, he said, “The acquisition of those four channels will forever change the DNA of MGM.”
Meanwhile, with the annual presentation’s much-repeated theme of low studio overhead, execs made no mention of the Lion’s fancy new den under construction within shouting distance of the annual meeting until a question was raised about the project’s status. MGM is set to move to Century City in May 2003, when it will occupy well over half of a glitzy, new 35-story high rise to be topped by the MGM name and maned logo on four sides.
“We’re really looking forward to it,” Yemenidjian allowed.