MGM/UA Entertainment Co., which replaced its chief operating officer three weeks ago after a disappointing stint at the box office, on Thursday reported a net loss of $82.2 million for the three months ended Feb. 28, compared to net income of $16 million a year before.
The Culver City-based motion picture company reported a net loss of $80.5 million for the first six months of its fiscal year on revenue of $332.9 million. Revenue for the second quarter was $162.1 million, down 24% from $214.3 million a year earlier.
An undisclosed portion of the second-quarter loss was attributed to MGM/UA's downward revision in the value of films produced under the regime of former MGM/UA President and Chief Operating Officer Frank Yablans, who left the company last month.
MGM/UA Vice President Arthur E. Rockwell cited disappointing results from films such as "Mrs. Soffel," "Garbo Talks," "Aviator" and "Martin's Day," and said two motion pictures, "Movers and Shakers" and "O.C. and Stiggs," might not ever be released by MGM/UA.
The company noted that the second-quarter results did not reflect any income from recently concluded licensing deals with the nation's two largest pay-television services, Home Box Office and Showtime/The Movie Channel. The non-exclusive pay-television deals could generate a minimum of $75 million for MGM/UA over the 10-year contracts, Rockwell said.
Interest expense rose about 11% during the second quarter to $15.1 million. Rockwell attributed the increase to stepped-up production of motion pictures.
Although the company did not disclose the amount of write-downs taken on films during the second quarter, the amortization of films was included in operating expenses of $244.8 million, Rockwell said. The second-quarter operating expenses were 43% higher than the sum reported a year ago.
MGM/UA reported a 45% decline in revenue from theatrical distribution of feature films during the second quarter to $40.6 million. For the six months, theatrical revenue was $77.1 million, down 47% from $144.6 million a year ago.
Corporate administration expenses rose 41% in the second quarter to $5.8 million. For the six months, however, those expenses rose just 1% to $9.9 million.