MGM’s 2nd-Quarter Loss Narrows Though Revenue Drops 17%

Metro-Goldwyn-Mayer Inc. on Thursday said it significantly narrowed its second-quarter loss, while shedding no light on whether the Los Angeles studio may be sold soon to Sony Corp. or Time Warner Inc.

MGM’s loss was $19.7 million, or 8 cents a share, for the quarter ended June 30, compared with a loss of $133.6 million, or 55 cents, a year earlier when the company had a $93.1-million loss stemming from the sale of its interests in the Rainbow Media cable networks.

Revenue in the second quarter fell sharply, down 17% to $406.1 million. The company said its year-earlier sales of $487.7 million had been boosted by $140.1 million in home video revenue from the James Bond hit “Die Another Day.”

MGM said it generated $33.6 million in net cash in the quarter, adding that it shipped 34 million DVD units, up 11% from a year earlier. The company also said it expensed employee stock options before it was required to, resulting in a $7-million charge.

David Miller, an analyst with Sanders Morris Harris in Los Angeles, said the quarter was a good one for MGM. He said revenue was lower than he expected but pretax earnings and the company’s per-share loss were better than he forecast.

In a conference call, MGM Vice Chairman Chris McGurk said two films released in the quarter, “Walking Tall” and “Saved,” would turn a profit but that “Soul Plane” was a disappointment. He added that the company expected the recent release “De-Lovely” to be profitable, but the teen comedy “Sleepover” showed a loss.

MGM, which is controlled by billionaire Kirk Kerkorian, did not take questions about potential sale talks.

Sony has indicated that it might pay as much as $5 billion for MGM, including $2 billion in debt MGM took on recently to pay a special $8-a-share dividend to shareholders. But the Japanese electronics company’s efforts have been stalling as it tries to forge an accord with equity partners who would fund the bid.

Time Warner also has floated a bid likely to involve stock, but its executives have made it clear they believe $5 billion is an expensive price to pay.

MGM fell 6 cents to $12.10 on the New York Stock Exchange.