MGM Makes Rocky NYSE Debut With Quick Drop in Share Price

Metro-Goldwyn-Mayer Inc. found itself playing to a tough audience when the legendary movie studio debuted on the New York Stock Exchange on Thursday.

The opening price of $20 per share fell quickly, dropping to a low of $19 in heavy trading before rebounding to a closing price of $21.

Some analysts attributed the initial slide to investors’ concern about the company’s weak earnings history and the profitability of upcoming films. The studio distributed such classics as “Gone With the Wind” before its fortunes waned in a series of damaging deals during the 1980s and early ‘90s.

The stock offering is part of a campaign to revive MGM that began in October 1996 when billionaire Kirk Kerkorian and Australian media magnate Kerry Stokes bought the studio from the French bank Credit Lyonnais. MGM Chairman Frank Mancuso stayed on as part of the deal.

The company plans to use proceeds from the sale to pay off debt.

The studio hasn’t had a full production schedule since Credit Lyonnais put it up for sale.

MGM has said it recorded a loss of $744 million in 1996, $169 million in ’95 and $171 million in ’94. Losses are expected to continue for the next three years.