BLONDE CAN'T KEEP
LION OUT OF RED
Copyright 2001 www.tombraiderchronicles.com
[ October 23rd 2001 ]
its third consecutive quarterly loss Monday and
again blamed the impact of new accounting rules
which overwhelmed contributions by hit films including
breakout laffer "Legally Blonde." Rules now require
studios to account for pic marketing costs upfront,
a change from past practices that's made for difficult
earnings comparisons this year.
suggest that's part of the reason MGM bounced
its much-anticipated "Windtalkers" release from
the fourth quarter, as the Lion seeks to stanch
red ink by year's end. But studio says pic was
shifted solely because execs expected marketing
problems amid ongoing U.S. military action.
event, the decision has left the Lion without
any further fourth-quarter wide releases. Studio
previously postponed to 2002 potential fourth-quarter
release "Hart's War" as well as third-quarter
releases "Rollerball" and "Killing Me Softly."
Those moves followed a changing of the guard atop
MGM's film marketing and distribution divisions.
third-quarter marketing charges included much
of the pricey campaign for disappointing Bruce
Willis starrer "Bandits," released two weekends
into the fourth quarter on Oct. 12. UA's horror
pic "Jeepers Creepers" and artfilm "Ghost World"
marked solid box office in the third quarter.
as a result of its various marketing charges,
MGM posted a $16 million loss in the latest quarter,
compared with a $27.1 million profit in the same
period last year. Feeding the red ink was an unspecified
writedown on poorly performing "Original Sin,"
a modestly budgeted Antonio Banderas/Angelina
Jolie starrer in which MGM is believed to have
invested $8 million.
a laffer that also starred Billy Bob Thornton
and Cate Blanchett, "has underperformed our expectations,"
MGM vice chairman Chris McGurk acknowledged. He
claimed older auds targeted by the pic have been
discouraged from moviegoing by current events,
including the anthrax scare and other possible
terrorist targeting of public places.
earnings conference call, MGM execs forecast a
small fourth-quarter profit and said the new accounting
rules won't hurt earnings prospects in the period.
Any writedown on "Bandits" would come in the final
quarter, but there will be scant film-marketing
charges to account for in the quarter.
are hoping things will improve dramatically next
year. In addition to box office from delayed 2001
releases and other theatrical bows, the Lion should
reap a substantial portion of its anticipated
$50 million-$100 million in "Legally Blonde" profits
from title's homevid/DVD debut next year.
it's still committed to robust film releasing
after a paucity of such activity in recent years.
Lion is the least vertically integrated of the
majors, so moviemaking reps its biggest potential
cache of cash flow outside of home entertainment.
any third-quarter gains at MGM were traceable
mostly to homevid and DVD. Excluding the new accounting
principles, period's $28.2 million in net income
repped "the best quarter profits in (MGM's) 77-year
history," officials said. (F)ilm and television
library revenues grew by 29% in the quarter,"
chairman and CEO Alex Yemenidjian noted. Overall,
MGM's quarterly revenue rose 26% to $393.3 million.
cash flow was off 79% at $9.2 million. Feature-film
slippage accounted for most of that decline, while
the studio's modest TV operations posted a small
results outpaced most analysts' expectations.
But studio execs revealed they won't have a much-discussed
"Pink Panther" movie ready for release in 2002,
an announcement unlikely to build faith in the
studio's commitment to aggressive moviemaking.
"We're committed to doing 'Pink Panther' right,"
McGurk said. "We don't need to fill out our release
slate in 2002."
expects to release 11 MGM and United Artists pictures
by the end of this year."You can't expect these
guys to have a release every week," Sutro analyst
David Miller observed. "They're just not that
big, and they can't afford to do that."
sources indicated the Lion had been looking to
shore up operating capital. It's believed "Windtalkers"
alone cost well north of $100 million to shoot
-- costs MGM now will carry until World War II
pic is released next June -- and the Lion was
forced to sell off some foreign rights to fund
other releases skedded for 2002 is studio's next
James Bond pic, set to begin shooting in January
en route to a November bow. Though a big-budgeted
affair, Bond releases have delivered consistently
boffo box office for MGM in recent years.
they are less vertically integrated than all the
other majors, the results of any one film shows
up (in the bottom line) that quarter," Gerard
Klauer Mattison analyst Jeffrey Logsdon observed.
"That's unlike a Disney or a Viacom or a Fox,
where the results of a single film almost never
show up in an earnings statement."