Lion Roars As Bond Helps Turn Loss Into Profit

SANTA MONICA, Calif. (Reuters) – James Bond had the Metro-Goldwyn-Mayer lion roaring again Tuesday as the movie studio`s fourth-quarter earnings beat Wall Street estimates, proving Agent 007 still has a license to kill at both the box office and in the video store.

MGM reported net income of $15.2 million, or 8 cents per share, for the three months ended Dec. 31, compared with a net loss of $43.7 million, or 41 cents per share (based on fewer average shares outstanding), in the prior year`s fourth quarter. Wall Street analysts polled by First Call/Thomson Financial had expected earnings of 7 cents per share. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $47.7 million in the quarter, compared with a loss of $15.6 million for the same period last year, it said.
MGM`s stock fell 1/16 to 23-1/8 in late trading on the New York Stock Exchange.

The company, known for its familiar roaring lion at the start of feature films, said it was the second consecutive profitable quarter under new management and its strongest quarterly operating results in 12 years. It attributed the results primarily to a series of successful films in theatrical release, including the latest Bond blockbuster, “The World is Not Enough,” which has so far taken in over $320 million at the box office. In addition, a special boxed set of seven James Bond films on video and DVD exceeded 3.1 million units worldwide, helping DVD sales to more than triple in the fourth quarter.

Also contributing to the reverse from loss into profit was “the favorable impact of a corporate restructuring implemented by the new management team,” MGM said.

“Our continued profitability should reinforce to everyone that the `new MGM` is not only back in business, but is fully committed to bottom-line performance,” Chairman and Chief Executive Alex Yemenidjian said. “Beyond the company`s substantial accomplishments over the past few months, we believe that the initiatives we have in place in all areas of the company will sustain this improvement as we look ahead.” He noted MGM`s recent new movie channel in Israel, an agreement with Blockbuster video rental chain to develop digital streaming and downloading for selected MGM titles, and successfully reclaiming rights to 426 classic MGM films in Germany.

Sharon Williams, an entertainment analyst for CIBC World Markets, said she believed the launch of MGM-branded cable networks remained highly likely and will create significant long-term value.
“Management suggested two additional parties have joined in cable network discussions in recent months,” she said in a report. Additionally, she said, she expects MGM to comfortably reach her $75 million EBITDA estimate for 2000. “Upside to our $75 million estimate could come if a modest hit emerges,” she said.

MGM has a library of more than 4,100 movies such as “Gone With the Wind” and “West Side Story” and the “Bond,” “Rocky” and “Pink Panther” series, representing the world`s largest modern film library. Its operating units include MGM Pictures, United Artists Films, Orion Pictures, United Artists Ltd., MGM Television Entertainment, MGM Distribution Co., and MGM Home Entertainment, among others.

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