MGM Profit Drops 36% as Movie Sales Decline

Metro-Goldwyn-Mayer Inc., distributor of the James Bond spy movies, said Thursday that fourth-quarter profit fell 36% as film sales declined. Analysts expected a loss.

Net income dropped to $38.5 million, or 16 cents a share, from $60.3 million, or 25 cents, a year earlier, Los Angeles-based MGM said. Revenue fell 17% to $453.4 million from $543.1 million.

MGM, being acquired for $2.9 billion by an investor group led by Sony Corp., released only one film in theaters in the quarter, the Academy Award-nominated “Hotel Rwanda.”

An increase in television program sales didn’t outweigh a decline at its film unit. The studio released “Walking Tall,” “The Good, the Bad and the Ugly” and “The Pink Panther” on home video.

“Initiatives to market the MGM film and television library contributed” to the company’s financial results, Chief Executive Alex Yemenidjian said.

The company, controlled by billionaire Kirk Kerkorian, was expected to post a loss of 1 cent a share, the average estimate of seven analysts polled by Thomson First Call. Sales were expected to fall 1% to $538.2 million.

Fourth-quarter results included costs of $10.4 million, or 4 cents a share, for employee stock options and expenses, as well as costs related to the pending sale of the company.

MGM shares Thursday rose 2 cents to $11.90 on the New York Stock Exchange. They’ve fallen 29% in the last 12 months.

MGM generates revenue from box-office sales, by selling home videos to rental chains, retailers and consumers, and by licensing rights to its films to cable and broadcast television networks.

The studio’s library includes classics such as “West Side Story,” “Annie Hall” and “Rain Man.” MGM also has a TV production business.

Sales at the TV unit, which produces the Sci-Fi Channel’s “Stargate Atlantis,” rose 74% to $80 million in the quarter. Sales at the film unit fell 25% to $362 million.

Among recently produced films, MGM released on video a “Legally Blonde” boxed set, a “Barbershop” boxed set, a “Wild at Heart” special edition, “De-Lovely,” “Sleepover” and the “Rocky” anthology.