MGM Sees Record 4th Quarter Profit
{{#rendered}} {{/rendered}}Movie studio Metro-Goldwyn-Mayer Inc. on Monday boosted its fourth quarter earnings guidance to at least 12 cents a share with accounting changes, citing strong sales from its film library and marking the most profitable quarter in MGM history.
In particular, MGM released summer smash movie ``Legally Blonde,'' a comedy starring Reese Witherspoon, on home video and DVD during the quarter. Video and DVD sales of 2001's thriller ''Hannibal'' also continue to perform well, a spokesman said.
The earnings further show the lucrative value of licensing old movies like the James Bond pictures in MGM's library to television stations and networks wanting to air them.
{{#rendered}} {{/rendered}}``Fourth quarter results will reflect better-than-expected performance from the Company's film library, fueled by both worldwide home entertainment and television distribution,'' Chief Financial Officer Dan Taylor said in a statement.
MGM's forecast of a 12 cent profit for the quarter ended Dec. 31, before the accounting changes, far surpasses previous guidance of between 1 cent to 3 cents per share. It is double the 6 cents per share in the fourth quarter of 2000.
Before the effect of new accounting rules, MGM said it would post earnings of about 6 cents in the current quarter.
{{#rendered}} {{/rendered}}Accounting rules adopted this year by major movie studios require filmmakers to expense production and marketing costs when incurred. Until this year, they had been able to expense those costs over a film's commercial life span.
The average Wall Street estimate had been for the Santa Monica, California-based studio to post earnings of 3 cents per share, according to Thomson Financial/First Call.
MGM, which is controlled by billionaire Kirk Kerkorian, is one of Hollywood's oldest working movie studios with a history that spans 77 years. In the late 1980s and 1990s, its operations were hampered by poor management and bad movies.
{{#rendered}} {{/rendered}}But in recent years under the helmsmanship of Chairman Alex Yemenidjian and Vice Chairman Chris McGurk, it has turned around operations and begun producing profits.