'BLONDE,' BOND HELP BLUNT 2ND-QUARTER MGM LOSS.
SANTA MONICA - Metro-Goldwyn-Mayer Inc. on Tuesday reported a second-quarter net loss of $133.6 million, or 55 cents a share, due largely to costs connected to the sale of its stake in three cable channels.
But the company's shares were up 34 cents after financial results exceeded Wall Street expectations thanks to a solid box-office take for ``Legally Blonde 2: Red, White & Blonde'' and record sales of the DVD version of the 20th James Bond film, ``Die Another Day.''
``They did better than we expected,'' said Robert Routh, a New York- based analyst for Natexis Bleichroeder. ``I think they are being financially disciplined in terms of movie production, and the titles they are releasing on home video are doing better than expected.''
The net loss was wider than last year's second-quarter net loss of $121.8 million or 48 cents a share. MGM lost $93.1 million, or 38 cents a share, last month when it sold its 20 percent financial interest in the American Family Channel, The Independent Film Channel and WE: Women's Entertainment to New York-based Cablevision Systems Corp.
The sale of the cable channels was designed to give MGM more cash for its current bid for Vivendi Universal's U.S. entertainment assets.
MGM Chief Executive Alex Yemenidjian said during a conference call with analysts Tuesday that the company would not ``overpay'' for the Vivendi assets. He said if MGM's $11.5 billion bid to acquire Vivendi's media assets failed, the company would return some of MGM's cash stockpile to shareholders.
``With a debt-free balance sheet and strong cash-flow generation, MGM is now in the strongest financial position it has ever been in,'' he said. ``This gives us great leverage to pursue transactions that create wealth for our shareholders.''
On an operating basis, MGM narrowed its losses to $18.5 million compared to $99.3 million in losses a year earlier. Second-quarter revenues increased by 45 percent to $487.7 million.
The improved financial picture was due to strong performances from MGM's movie, home video and television operations.
Among the highlights are the latest James Bond film, ``Die Another Day,'' which will become the best-selling home entertainment title in MGM's history, with more than 16 million units to be shipped. This resulted in a 107 percent leap in MGM's DVD sales and bumped up the studio's DVD library marketshare two percentage points to 19 percent, one point behind industry leader Warner Bros.
Chris McGurk, MGM's vice chairman and chief operating officer, said the ``Legally Blonde'' sequel, which has earned more than $76 million at the box office over three weeks, will be released on DVD during the fourth quarter.
``We are very confident that this modestly budgeted film, carefully targeted at its audience in the middle of much more expensive summer releases, will become one of MGM's most profitable films ever,'' McGurk said.
McGurk also touted television successes such as the highly rated Showtime series ``Dead Like Me,'' and the upcoming seventh season of the Sci-Fi Channel series ``Stargate SG-1.''
MGM executives said they expected to experience negative cash flow during the third quarter due to concentrated releasing costs of five coming theatrical releases, including ``Jeepers Creepers 2'' and ``Uptown Girls.'' Yemenidjian said he expected a return to positive cash flow by the fourth quarter.
Still, media analyst David Miller of Sanders, Morris Harris said the company is clearly on the right track with a return to its original strategy of lower financial investment in films following a string of expensive box-office bombs in 2002.
``Last year, we were very critical of the MGM management team for straying from that with 'Windtalkers,' 'Rollerball' and 'Hart's War,''' Miller said. ``This year, it has been a completely different story with no film write-downs.''
MGM shares closed at $12.60 Tuesday, up 34 cents or 2.8 percent on the New York Stock Exchange.
Greg Hernandez, (818) 713-3758
MGM is reporting a second-quarter loss, but the news was tempered by the solid box-office take of ``Legally Blonde 2: Red, White & Blonde,'' a sequel starring Reese Witherspoon.
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|Publication:||Daily News (Los Angeles, CA)|
|Article Type:||Statistical Data Included|
|Date:||Jul 23, 2003|
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