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MGM Warns of Significant Loss for Third Quarter

Movies: The studio plans to take write-offs on two disappointing films and for severance benefits.

September 30, 1998|JAMES BATES

Metro-Goldwyn-Mayer warned that it will show a "significant operating loss" when it reports results for the third quarter ended Sept. 30 due to two disappointing films and money paid out in severance benefits.

In a filing this week with the Securities and Exchange Commission, MGM said it plans to take a write-off of about $20 million on the two films it released in the quarter, "Disturbing Behavior" and "Music From Another Room."

The announcement comes on top of other film losses this year for the Santa Monica-based studio.

Most of MGM's other recent films, such as "Dirty Work" and "Species II," have been box-office disappointments. But its most recent movie, "Ronin" starring Robert De Niro, debuted strongly with a gross of $12.7 million over the weekend.

MGM also said it will incur $13 million in severance expenses stemming from the cutting of 80 jobs earlier this month in an effort to lower overhead. MGM said the cuts will eventually result in overhead savings.

MGM shares closed down 50 cents at $15 on the New York Stock Exchange.

Separately, MGM owner Kirk Kerkorian's Tracinda Corp. formally denied rumors that a potential deal was being discussed with Seagram Co. Among the rumors is that Seagram would exchange the film unit of its newest acquisition, music giant PolyGram, for a piece of MGM.

Last week, MGM said it is no longer in discussions about a possible sale of the company to a larger media firm.

MGM in August confirmed that it was in discussions with unidentified companies. Sources have previously said that MGM at one point held preliminary discussions with both News Corp. and Walt Disney Co.

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