Revenues Up 25 Percent at MGM24 Apr, 2003 By: Joan Villa
MGM will release to video the $45 million box office title Agent Cody Banks in the third quarter and the summer theatrical sequel Legally Blonde 2: Red, White & Blonde to capitalize on fourth quarter holiday sales, the studio reported in its first quarter earnings call.
MGM has also signed Queen Latifah for a role in Barbershop 2, set to begin filming with Ice Cube and Cedric the Entertainer in Chicago this summer. That film will precede a spinoff lead role for Latifah in the 2004 theatrical release Beauty Shop, which she will also produce, the company said.
The studio narrowed its net loss to $55.8 million from $90.8 million a year ago, boosted revenues 25 percent to $395 million and increased worldwide DVD shipments by 25 percent in the first quarter ended March 31. Contributing to the quarter's cash flow were the home video releases Barbershop, Igby Goes Down and a special edition of West Side Story, as well as Crocodile Hunter and several James Bond library titles carrying over from 2002's fourth quarter, the company reported. VHS unit shipments declined 25 percent to 30 percent in the quarter, but were more than offset by gains in DVD, said senior EVP and CFO Dan Taylor.
In the second quarter, MGM expects to ship more than 14.5 million DVD and VHS units worldwide of Bond film Die Another Day following its June 3 domestic release, according to vice chairman and COO Chris McGurk. The title will be released to international markets over the balance of 2003, he added.
“It is clearly our biggest Bond film ever and should be a big profit contributor for MGM on DVD and VHS, “ McGurk said. A second wave of Bond boxed sets will follow in November, he added.
MGM has laid out an economic strategy of developing high-return films costing under $25 million -- such as Agent Cody Banks and Barbershop 2 -- that target specific audiences and minimize risk, McGurk said. The $3 million acquisition Bowling for Columbine has generated $21 million in domestic box office and become the highest grossing narrated documentary, he added.
Chairman and CEO Alex Yemenidjian said the studio will use its growing cash flow to reduce debt, buy back stock and acquire films. During the quarter, MGM repurchased 3.4 million shares at an average price of $10.60 per share, bringing the total repurchased to 6.3 million shares. Among other options to boost MGM's long-term profitability, Yemenidjian said he has not ruled out taking the company private.