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MGM Posts 1st Quarterly Profit in 3 Years

October 13, 1999|From Bloomberg News

Metro-Goldwyn-Mayer Inc., owner of one of the largest movie libraries, posted its first quarterly profit in almost three years, aided by strong sales for "The Thomas Crown Affair" and other films.

MGM's third-quarter net income rose to $10.3 million, compared with a loss of $40.3 million a year ago. The per-share net was 7 cents, compared with a year-ago loss of 61 cents.

Three profitable movies in release during the quarter--"Tea With Mussolini," "Stigmata" and "Thomas Crown"--and higher revenue from the TV division, with five shows on the air, boosted results. After a string of money-losing movies, the company's new chairman, Alex Yemenidjian, has been revamping the studio by cutting costs, seeking alliances for TV distribution of its films and regaining full rights to its programming.

MGM last reported a quarterly profit in the fourth period of 1996, when it earned $166,000. It hasn't had an annual operating profit in more than a decade.

MGM shares today closed unchanged at $22.19.

MGM during the second quarter wrote off costs for several films, including "Stigmata," that the company didn't expect to perform as well as they have. Because of those movies' strong performance, MGM essentially reversed part of the write-off, a move that contributed about $18 million in cash flow to the third quarter, Chief Financial Officer Dan Taylor said.

"The Thomas Crown Affair" has generated about $67 million in ticket sales in the U.S. and Canada since its release in early August, and it's expected to take in more than $140 million worldwide. "Stigmata" has grossed about $46.5 million domestically.

MGM is boosting the number of pictures it will release, with plans for 10 to 15 movies a year under the MGM label and another seven to 10 under its United Artists specialty label, compared with a historical level of six to eight for the company.

MGM Vice Chairman Chris McGurk said about one-third of its films will be sequels and remakes, which, he says, on average cost about half as much to develop and produce as new films.

The TV unit improved its results this quarter because of higher worldwide sales from the syndication of its shows, or selling episodes to broadcast and cable outlets. The company sold "In the Heat of the Night" to Time Warner Inc.'s Turner Broadcasting unit.

MGM shares have risen about 59% since its controlling shareholder, billionaire Kirk Kerkorian, chose Yemenidjian in April to lead the company.

The company had about $1.3 billion of debt and $11 million in cash at the end of September. The company plans a rights offering to shareholders that's expected to raise another $720 million.

MGM went public two years ago at $20 a share.

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