<I>Barbershop</I> Lathers Up MGM Earnings22 Oct, 2002 By: Joan Villa
MGM credited the low-cost hit comedy Barbershop, 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 this year.
EBITDA (earnings before interest, taxes, depreciation and amortization) tripled to $28.7 million from $9.2 million in last year's third quarter. Quarterly revenues, however, slipped 3 percent to $381.2 million from $393.3 million a year ago, while revenues for the first nine months rose 2 percent to $1.03 billion from $1.01 billion in 2001.
The $65 million box office success of Barbershop also couldn't reverse earlier theatrical disappointments Rollerball, Hart's War and Windtalkers, which contributed to a net loss for the first nine months of the year of $201 million 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, as the studio continues to tap movies and TV shows for DVD release.
On the theatrical side, the studio expects other low-budget movies released in the quarter, The Crocodile Hunter: Collision Course and the art-house hit Igby Goes Down to generate future profits on video.
“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."