MGM SHOWS A PROFIT FILM LIBRARY REVENUES CREDITED FOR EARNINGS.

Byline: Jesse Hiestand Staff Writer

Earnings at Metro Goldwyn Mayer rose an impressive 162 percent in the third quarter despite the release of just one major film - a tepid love story deemed too troubled for critics to see before release.

``Autumn in New York'' with Richard Gere and Winona Ryder has earned $37 million since its August debut, but the studios said its extensive film library, home video sales and low overhead drove the company's fifth consecutive quarter of profitability.

``While we prepare for the launch of our impressive slate of films next year, the third-quarter results underscore the exceptional depth, stability and consistent cash flow generated by our film library in various markets worldwide,'' said vice chairman Chris McGurk.

MGM made $27.1 million on revenue of $315 million in the quarter ending Sept. 30, compared with net income of $10.3 million on revenues of $299 million the previous year. That translated to 13 cents per share, up from 7 cents per share in the comparable quarter in 1999.

McGurk and chairman Alex Yemenidjian were tapped by the studio's majority owner, financier Kirk Kerkorian, to turn around the company about 18 months ago after a string of box office duds, including ``Mod Squad'' and ``Disturbing Behavior.''

``One of their first areas of focus was overhead, which is now the lowest in the business,'' said MGM spokesman Craig Parsons. ``That allows us to operate with fewer films if necessary.''

In this year of transition, the studio released just seven films, compared with 20 scheduled for next year, including ``Hannibal,'' the anticipated sequel to ``Silence of the Lambs.''

Even with fewer releases, the studio reported net income of $38.6 million in the first nine months of 2000, compared with a loss of $546 million in the same period last year.

Much of that revenue was generated by the studios 4,100-film library, said to be the largest modern film library in the industry.

The company also strengthened itself in the area of video and DVD rental by regaining control of video rights to its films from Warner Bros. in March 1999. MGM has bought several film libraries in the past three years, Parsons said.

To further hedge its risk in the volatile movie market, MGM has joined the industry trend of financing many films through co-production deals with other studios. Universal Pictures will get international rights to ``Hannibal,'' for example, Parsons said.

``The emphasis of the company is now clearly on the bottom line and not just filling a theatrical pipeline of products,'' said Art Rockwell of Rockwell Capital in Burbank. ``The key thing is the co-financing and the heavy emphasis on promoting home videos and DVDs.''

This is the first time the company has had five straight quarters of profitability in 12 years, Parsons said.

And even though ``Autumn in New York'' fared poorly with critics, it is expected to be fairly profitable.

The company also said it is taking advantage of the rapidly expanding worldwide DVD market by releasing 128 DVD titles, in addition to 222 video titles, this year. Further increases in DVD titles from MGM's library are planned for next year.