×

MGM Studios Projects 40% Earnings Drop Amid Epix Now Launch

MGM announced this week that it expects a 40% decline in earnings in 2019 as it invests in its Epix Now streaming service.

The company said in February that it would launch Epix Now at $5.99 per month, joining other premium channels that have already rolled out over-the-top services. In order to attract subscribers, Epix is rolling out a slate of original programming to accompany its traditional movie offerings.

MGM co-founded Epix with Viacom and Lionsgate in 2008, and bought out the other two partners in a $1 billion deal in 2017. In an earnings call on Tuesday, MGM executives said Epix is projected to lose $50 million to $70 million this year as MGM invests in content to grow the service.

The delay of “Bond 25” to April 2020 has also put a damper on this year’s projections. The next installment of the Bond franchise was initially set to debut in November 2019, but was pushed back when director Danny Boyle was replaced by Cary Joji Fukunaga. The film is now set to bow on April 8, 2020.

The company reported $330.5 million in adjusted EBITDA for the year ending Dec. 31, 2018, down from $422.9 million in 2017. A 40% drop would put the 2019 figure at $200 million.

MGM CFO Ken Kay advised that the “temporary decline in earnings” would cause an increase in leverage, and that total debt would hit $1.9 billion. Kay said the company would still have $600 million available under an existing credit facility, and would not need to engage in further restructuring.

The company projects that overall EBITDA will return to 2018 levels in 2020, thanks to the release of the Bond film, and that Epix will be restored to profitability in 2021.

Epix is launching two 10-episode TV series this summer: “Pennyworth,” about Bruce Wayne’s butler, and “Perpetual Grace, LTD,” a noir starring Ben Kingsley. “Godfather of Harlem,” a period drama starring Forest Whitaker, is due in the fall; and “Belgravia,” a six-part series from Julian Fellowes, is coming in 2020.

Popular on Variety

More Biz

  • Led Zeppelin Stairway to Heaven

    Department of Justice Backs Led Zeppelin in ‘Stairway to Heaven’ Copyright Case

    The U.S. Department of Justice has weighed in on the next big music copyright case on the horizon following the Katy Perry “Dark Horse” decision, and taken Led Zeppelin’s side in the long-running copyright dispute that pits the writers of the group’s anthem “Stairway to Heaven” against the publishers of the earlier song “Taurus” by [...]

  • Harvey Weinstein

    Harvey Weinstein Prosecutors Make Last-Minute Move to Bolster Case

    The Manhattan D.A.’s office is making a last-minute bid to strengthen its case against Harvey Weinstein, who is set to be tried next month on charges of rape and sexual assault. Prosecutors notified the court on Tuesday that they will seek a new indictment. The D.A.’s office wants jurors to hear from Annabella Sciorra, the [...]

  • Jeffrey Epstein

    Jeffrey Epstein's Autopsy Rules That He Died by Suicide

    Jeffrey Epstein’s death earlier this month has been ruled a suicide by hanging. The New York Times reported on Friday that the city’s medical examiner has officially made the ruling six days after Epstein was found dead in his jail cell at the Metropolitan Correctional Center in Manhattan. According to the Times, which cites a [...]

  • America Ferrera Eva Longoria

    America Ferrera, Eva Longoria and More Sign Letter to Latinx Community: 'We Will Not Be Broken'

    America Ferrera, Eva Longoria and more have signed a letter published in several media outlets on Friday standing in solidarity with the Latinx community. In response to the heightened tension surrounding President Trump’s immigration agenda, the El Paso shooting that targeted Latinx people and the ICE raids in Mississippi, the letter addresses the language used [...]

  • Research Firm Screen Engine/ASI Acquires TicktBox

    Screen Engine/ASI Acquires TicktBox, an Entertainment Marketing and Ticketing Startup

    Screen Engine/ASI, a market research firm that specializes in focus-group testing of movies and TV pilots, has acquired ticktBox, which operates a digital marketing and ticketing platform used by movie distributors, exhibitors, and TV networks. Terms of the deal, which closed Aug. 9, weren’t disclosed. With ticktBox, SE/ASI will have one of the largest databases of [...]

  • NEW YORK, NEW YORK - AUGUST

    Eric Reid, Jemele Hill – and Colin Kaepernick? - Take Jay-Z to Task Over NFL Partnership

    When news of the presumably lucrative entertainment and social-justice deal between Jay-Z’s Roc Nation and the NFL leaked on Tuesday, initially there was a surprising lack of public reaction or outcry. But after a press conference where Jay and NFL commissioner Roger Goodell officially announced the deal at Roc Nation’s New York offices yesterday — [...]

More From Our Brands

Access exclusive content