Movie DVD Sales Boost MGM Earnings

Metro-Goldwyn-Mayer Inc., the film studio controlled by billionaire Kirk Kerkorian, said Wednesday that fourth-quarter profit rose 2.7%, helped by sales of movie DVDs including “Legally Blonde 2.”

Net income climbed to $60.3 million, or 25 cents a share, from $58.7 million, or 24 cents, a year earlier, Los Angeles-based MGM said. Revenue fell 13% to $543.1 million from $620.9 million.

DVD shipments jumped 41% as MGM capitalized on its film library, one of the world’s largest. Sales of older movies including the 1987 “Princess Bride” helped produce a 21% rise in home-entertainment sales and higher profit, the studio said. Film revenue fell 9.5% from the previous year, when MGM benefited from the James Bond movie “Die Another Day.”

“We are very confident in our upcoming release slate,” Chief Operating Officer Chris McGurk said in a conference call with analysts.

The company plans to release 15 films this year, including a “Pink Panther” remake starring Steve Martin. MGM’s first 2004 release, “Barbershop 2: Back in Business,” will be “extremely” profitable, and the company is in talks to develop a cable series based on the film, McGurk said.

McGurk also said MGM had held talks with Pixar Animation Studios, which has said it would end a film distribution agreement with Walt Disney Co. Pixar Chief Executive Steve Jobs has said his company was talking to other studios about a similar agreement.

“We have spoken to Pixar and we do intend to speak with them again very soon,” McGurk said Wednesday. Chief Executive Alex Yemenidjian said, “I believe we are the best fit for Pixar in terms of a worldwide distribution deal versus the other studios.”

McGurk said MGM didn’t plan to compete with Pixar in animation.

In the latest quarter, MGM released two films, “Good Boy!” and “Out of Time,” which brought in $37.7 million and $41.1 million, respectively, at the domestic box office. “Good Boy!” cost an estimated $20 million to make, while “Out of Time” cost about $31 million, Goldman Sachs analyst Anthony Noto wrote in a report to clients.

MGM was expected to earn $48 million, or 21 cents a share, on sales of $541.4 million, according to the average estimate of analysts polled by Thomson First Call.

Results a year earlier included a gain of $32.5 million, or 13 cents a share, from MGM’s sale of its stake in the Bravo cable network to General Electric Co.’s NBC unit. Excluding one-time items, MGM earned 6 cents a share in the year-earlier quarter.

Shares of MGM rose 30 cents to $17.42 on the New York Stock Exchange.