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MGM posts third-quarter net income of $16.6 million

November 14, 2013|By Daniel Miller
  • Third-quarter results by MGM Holdings Inc., the parent of Metro-Goldwyn-Mayer Inc., were buoyed the strong performance of "Skyfall" and "The Hobbit: An Unexpected Journey."
Third-quarter results by MGM Holdings Inc., the parent of Metro-Goldwyn-Mayer… (MGM )

MGM Holdings Inc., the parent of Metro-Goldwyn-Mayer Inc., on Thursday reported third-quarter net income of $16.6 million, buoyed by the strong performance of "Skyfall" and “The Hobbit:  An Unexpected Journey" on home entertainment platforms. 

The privately held film and television company said in a filing on its website that it had posted revenue of $242.9 million for the three-month period that ended Sept. 30 -- an increase of 43% over the $169.3 million taken in during the same quarter in 2012. 

Net income was down 29% from the $23.4-million profit the company posted a year earlier. However, the comparable 2012 figure included a one-time gain related to the sale of a television asset.

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Excluding that gain, which came from the sale of Latin American pay-television assets to Chellomedia, a division of telecommunications and TV company Liberty Global Inc., MGM's net income was up $23 million.

"We had another impressive quarter and are extremely pleased with our results year to date, which show the earnings power of our growing fresh content pipeline in both film and television," MGM Chairman and Chief Executive Gary Barber said in a statement.

The company attributed its third-quarter success in part to two fourth-quarter 2012 blockbusters it co-financed: "Skyfall" and "The Hobbit".

"Skyfall," the latest James Bond film, grossed $1.1 billion worldwide; "The Hobbit," the first in a planned series of films based on the J.R.R. Tolkien book, took in $1.01 billion globally.

MGM said those movies' performances on pay television and video-on-demand platforms helped boost revenue in the company's television licensing business by $76 million compared with the same quarter a year ago.

The company's second film in the "Hobbit" series, "The Hobbit: The Desolation of Smaug,” is scheduled to be released by Warner Bros. on Dec. 13.

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MGM emerged from bankruptcy in December 2010, and filed a draft registration statement for an initial public offering with the Securities and Exchange Commission in July 2012.

The company filed as an "emerging-growth company,” an SEC classification that offers businesses with less than $1 billion in annual revenue to sidestep some regulatory and filing requirements.

In March, MGM reported 2012 revenue of $1.38 billion, invalidating the company's status as an "emerging-growth company." As a result, MGM would need to file a new draft registration statement before it could go public. 

Also on Thursday, in a move Barber characterized as a display of "continued confidence in the company," MGM said it was increasing the size of its stock repurchase plan. The company upped the size of the program -- which was announced in September -- by $75 million to a total of $150 million. It also said then that it was adopting a dividend designed to protect the company from a hostile takeover. 

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The dividend, which went into effect in September, is for one "purchase right" for each outstanding share of its Class A and B common stock. It serves as a coupon, allowing the holder to buy 0.001 of a share of a newly created class of preferred MGM stock at an initial price of $110.

The dividend can be exercised if a person or group becomes the owner of 10% or more of common stock, or announces a prospective deal that would make such a person or group an owner of that size.

MGM said in September that the move was not being made in response to a "known effort" to acquire the company. But it has experience with a hostile takeover effort. In 2010, activist investor Carl Icahn acquired an interest in MGM with the goal of merging it with Lions Gate Entertainment.

He sold his approximately 25% stake in MGM back to the studio last year. 

Shares of MGM Holdings, which trade over the counter, were up 6.88% to $66 in afternoon trading on Thursday.


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