Video, DVD Boost MGM to Record 4th Quarter

Home video and DVD sales propelled Metro-Goldwyn-Mayer Inc. to a record fourth quarter, the company announced Wednesday.

Profit for the fourth quarter more than tripled to $39 million, or 16 cents a share, up from $12.4 million, or 6 cents a share, in the year-earlier period. Revenue jumped to $375.5 million, up 28.6% from $292 million a year earlier.

The earnings exceeded the company’s December guidance of about 12 cents a share. Analysts surveyed by Thomson Financial/First Call had expected earnings of 5 cents a share.

Company executives Wednesday would not discuss financier Kirk Kerkorian’s efforts to find a buyer for the storied studio; he owns 81% of MGM stock.

In a conference call with analysts, Chairman and Chief Executive Alex Yemenidjian said MGM has openly discussed for more than two years its goal to become a company with “more scale and more diversification of revenue stream.”

“Nothing has changed,” Yemenidjian said.

MGM’s bigger-than-expected revenue was fueled by sales of videocassettes and DVDs, specifically last summer’s Reese Witherspoon hit “Legally Blonde”; “Heartbreakers,” with Sigourney Weaver and Jennifer Love Hewitt; and “Hannibal,” starring Anthony Hopkins.

Worldwide home video revenue increased 57% over the fourth quarter of 2000. Domestic DVD unit shipments were up 172% for the entire year.

MGM did not have a home-run theatrical hit during the fourth quarter. The October release of “Bandits,” a Bruce Willis-Billy Bob Thornton-Cate Blanchett robber caper, has been a disappointment with $41 million in box-office receipts, and the studio bumped back its release of the World War II story “Windtalkers,” with Nicolas Cage, to June 14.

“The library cash flow really was the story here,” said David Miller, media analyst and vice president at the investment banking firm Sanders Morris Harris. “These results underscore the power of MGM’s film library as the company’s crown-jewel asset.”

Vice Chairman and Chief Operating Officer Chris McGurk said the studio has released only 580 DVD movies from its library of more than 4,100 titles.

MGM did not release any videos or DVDs from its James Bond franchise last year, preferring to wait until the November release of the 20th Bond picture.

“We’re keeping our powder dry on the Bond movies,” McGurk said, adding that the studio will soon release the name of the new Bond picture.

The studio expects earnings to fall this quarter, particularly because of the expense of promoting its big-budget films “Rollerball,” which will be released Friday, and “Hart’s War,” with Bruce Willis, which will open next week. MGM spent about $1.8 million for one commercial during the Super Bowl for “Hart’s War.” McGurk said the studio gambled on the Super Bowl ad because the movie is geared toward men older than 17--the same demographic the game attracts.

MGM had its biggest year at the box office last year, McGurk said, with grosses of nearly $450 million and a 6% market share. The studio, which released 11 movies in 2001, plans to release 12 this year, including the Bond picture.

MGM shares rose 10 cents to close at $19.25 on the New York Stock Exchange.