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<I>Barbershop</I> Bolsters MGM, Bows Jan. 1

28 Oct, 2002 By: Joan Villa

MGM Home Entertainment set a Jan. 1 release date for Barbershop and also credited the low-cost comedy, along with DVD sales of library titles, for turning a year-ago loss of $16 million into a third-quarter net profit of $11.7 million.

The $65 million box office hit will street on a Wednesday in a departure from industry practice that Alex Carloss, MGM Home Entertainment SVP of marketing, called a test.

A $3.5 million advertising budget will tap lead-in TV spots on MTV's New Year's Eve party and the Jan. 1 college bowl games to create anticipation and awareness especially among new DVD owners, he said. The special edition DVD will retail at $26.98, while retailers can purchase the VHS at $38 per copy, regardless of quantity. Preorder is Dec. 3.

“A lot of our advertising dollars will be prestreet, and that's a function of needing to create an event at retail and rental during the first week,” Carloss explained. “Increasingly, you're seeing new releases using prestreet to incentivize their launches, mirroring the theatrical approach.”

The film, set in an urban Chicago shop where barbers and customers regularly banter about issues big and small, was criticized by Jesse Jackson for making light of the contributions of civil rights leaders. MGM, however, has stood by the movie and the filmmakers, and will not edit out the remarks to which Jackson took offense.

“We're extremely proud of this movie on many different levels,” added Carloss. “Anyone who's seen the movie and the context of the remarks knows this is a storm in a teacup. We're going to be marketing the movie as a laugh-out-loud comedy for all audiences.”

The special edition DVD will highlight Ice Cube, Cedric the Entertainer, Sean Patrick Thomas and the rest of the cast in deleted scenes, bloopers and outtakes, and a behind-the-scenes featurette. The disc also contains audio commentary with the director, writer and producers, an interactive game and a music video.

“With Cedric's popularity, the bloopers and outtakes will play a huge role in our marketing efforts,” Carloss added.

In third-quarter earnings released last week, MGM tripled EBITDA (earnings before interest, taxes, depreciation and amortization) to $28.7 million from $9.2 million in the year-ago quarter. Revenue, however, slipped 3 percent, to $381.2 million, from $393.3 million a year ago, while revenue for the first nine months rose 2 percent, to $1.03 billion, from $1.01 billion in 2001.

Barbershop's success also couldn't reverse earlier theatrical disappointments Rollerball, Hart's War and Windtalkers, which contributed to a net loss of $201 million for the first nine months of the year versus a net loss of $95 million in the year-ago period. However, MGM Home Entertainment Group's library market share rose to 17 percent -- almost a 50 percent increase from the start of the year.

On the theatrical side, the studio expects other movies released in the quarter -- The Crocodile Hunter: Collision Course and the art-house hit Igby Goes Down -- to generate future profits on video. Carloss said Windtalkers has already had a strong video debut.

“As we approach 2003, our investments in film and television production over the past three years will generate significant free cash flow,” explained MGM chairman and CEO Alex Yemenidjian. “These improved fundamentals, combined with the strongest balance sheet that MGM has ever had, allow us to look to the balance of this year and to 2003 with great confidence.”

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