MGM reduces earnings outlook on ‘Ben-Hur’ loss
Jack Huston, Morgan Freeman and Toby Kebbell star in “Ben-Hur.”
Movie studio Metro-Goldwyn-Mayer has reduced its annual profit outlook by about $50 million, thanks to the spectacular box-office crash of the summer epic “Ben-Hur.”
MGM warned investors Wednesday that it expects its 2016 earnings, excluding certain items, to decline 10% from last year’s profit of $431 million. That means its adjusted earnings would be about $388 million.
The Los Angeles company had previously expected to achieve flat or single-digit profit growth. But the subpar results for “Ben-Hur” will result in a write-down for the third fiscal quarter, hampering the studio’s financial results, MGM said.
Director Timur Bekmambetov’s remake of the 1959 Charlton Heston classic has grossed a dismal $54 million worldwide after costing $100 million to make and tens of millions more to market. Paramount Pictures co-produced and released the latest version domestically.
Studio executives anticipate that the movie, one of the biggest flops of the summer movie season, will lose $75 million for the companies involved, though some analysts have estimated the damage will be as much as $100 million. MGM covered about 70% of the production, marketing and distribution costs for the picture.
Nonetheless, MGM, the firm behind the James Bond franchise, said its yearly adjusted profit margin is still expected to increase to 30% from 25% a year ago, thanks to its robust library and other movies that have performed better.
The company’s recent hit “Me Before You,” released by Warner Bros., has grossed more than $200 million globally on a production budget of $21 million. Its “Magnificent Seven” remake, starring Denzel Washington and Chris Pratt, is on track for a strong opening weekend when it debuts Sept. 23.
“Although ‘Ben-Hur’s’ theatrical performance was substantially below our expectations, MGM remains in a very strong position,” MGM Chairman and Chief Executive Gary Barber said in the filing.
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