MGM books loss on ‘Dragon Tattoo,’ expects profit on ‘21 Jump Street’
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Returns of $231 million in worldwide box office wasn’t enough to turn a profit on ‘The Girl With the Dragon Tattoo.’
Metro-Goldwyn-Mayer disclosed in financial results released this week that it is booking what Co-Chief Executive Gary Barber called a ‘modest loss’ on the film. On a conference call with shareholders, he said the independent studio, which covered 20% of the approximately $100-million production budget for the movie co-financed and distributed by Sony Pictures, needed ‘Dragon Tattoo’ to collect about 10% more revenue in order to break even.
As a result, he said that while talks with Sony are ongoing for a potential sequel based on the second book in the ‘Millennium’ trilogy by author Stieg Larsson, MGM would participate only ‘assuming we can achieve better economics’ -- Hollywood-speak for a lower budget.
‘Dragon Tattoo’ was the first movie in which MGM invested after it emerged from bankruptcy in late 2010 under Barber and co-CEO Roger Birnbaum. The second, ’21 Jump Street,’ which was also co-financed with Sony, hit theaters Friday and looks like a success. Barber said that based on opening weekend box office of $36 million, MGM expects the relatively inexpensive action-comedy starring Jonah Hill and Channing Tatum to be profitable. He added that his studio plans to participate in the sequel, in development at Sony.
Although MGM is a private company, it has a broad base of shareholders and reports quarterly financial results to them, as well as holding a conference call to discuss the state of its business.
In 2011, MGM reported operating income of $79 million on $699 million in revenue. The company did not provide comparable results for the full year of 2010.
The filings indicated that 57% of MGM’s revenue came from television distribution, primarily of its library of 4,100 movies and 10,500 television episodes. The company has identified international TV sales as a key growth opportunity and last year signed new deals in Germany, Spain, Portugal and the Netherlands.
The company also said 27% of its revenue came from DVD and Blu-ray sales.
In the current year, MGM expects to see revenue grow significantly, largely due to its 50% interest in fourth-quarter releases ‘The Hobbit: An Unexpected Journey’ and ‘Skyfall,’ the newest title in the studio’s long-running James Bond franchise. Operating income will probably decline, Chief fFnancial Officer Dean Stratton said, due to increased costs for marketing and production.
MGM is in preproduction on the first two movies it has developed under Barber and Birnbaum: remakes of the 1987 action film ‘Robocop’ and the 1976 horror film ‘Carrie,’ based on Stephen King’s novel. Both are expected to be released next year.
Barber also noted that MGM is looking to shift its capital away from linear channels that the company owns -- television channels that play old MGM movies, for example -- and towards new opportunities in digital distribution. ‘We are actively exploring [joint venture] and investment opportunities. We’re very bullish about our digital opportunities around the globe,’ he said.
Though MGM stock is not publicly traded, one person knowledgeable about the shares but not authorized to discuss them publicly said the price increased from $24 to $26 per share after financial results were released Tuesday. That gives the studio a total value of about $1.7 billion, the person said.
-- Ben Fritz