Revenue slipped more than 16% due to tough comparisons and a couple of disappointing movies, but MGM posted a narrowed quarterly loss yesterday (July 29) largely because of strong DVD sales.
Revenue slipped more than 16% due to tough comparisons and a couple of disappointing movies, but MGM posted a narrowed quarterly loss yesterday (July 29) largely because of strong DVD sales. Continuing to decline comment on sale talks surrounding the studio, MGM brass touted the continued success of their library product, plans for the next Bond film and the modest success of such recent boxoffice releases as "Walking Tall" and "De-Lovely."
For the quarter ended June 30, MGM reported a net loss of $19.7 million, or 8 cents per share, on revenue of $406.1 million. The narrowed loss beat analysts' expectations, while revenue fell significantly short of the average $468 million Wall Street was predicting. David Miller of Sanders Morris Harris, who rates MGM "Hold," called the revenue figure "surprisingly light" and "not even close" to his expectation of $475.6 million.
MGM stressed that last year's second-quarter results included $140.1 million from one video title alone: "Die Another Day," the latest installment in the Bond franchise. The film was the most successful home entertainment release in the company's history, MGM said.
The quarterly net loss included a non-cash charge of $7 million related to MGM's early election to expense employee stock options, a practice that will become the norm for companies under new federal guidelines beginning next year.
Worldwide DVD shipments for the quarter increased 11% to about 34 million units.
The strength of MGM's library is considered the main attraction for Sony and Time Warner, who have both expressed interest in possibly acquiring MGM. All sides declined comment Thursday, as they have for most of the past several months. MGM chairman and CEO Alex Yemenidjian said at the outset of Thursday morning's earnings call with investors that company officers could not discuss anything having to do with a potential takeover.
Meanwhile, though, MGM continues to make it clear that it is moving forward and practicing business as usual. Chief operating officer Chris McGurk formally announced a first-look producing deal with Robert Simonds (HR 7/29) and highlighted such planned films as a remake of "Yours, Mine and Ours" -- which Simonds has come aboard to produce -- as well as a Michael Bay-directed remake of "The Amityville Horror," set to begin shooting next week.
McGurk conceded that the theatrical releases of the comedies "Soul Plane" and "Sleepover" were disappointing, but he said "Saved!" "Walking Tall" and "De-Lovely" should all be profitable for the studio. MGM's next wide release is scheduled to be "Wicker Park," a thriller starring Josh Hartnett, bowing Sept. 3.