MGM regains full control of United Artists
Metro-Goldwyn-Mayer has taken back full control of its legendary film label United Artists, is booking a loss on its recent release “The Girl With the Dragon Tattoo” and has added a top TV executive to its board of directors, the independent studio revealed in financial filings this week.
Formed in 1919 by film luminaries including Charlie Chaplin and Mary Pickford, UA became part of MGM in 1981. In 2006, UA became a joint venture between MGM and Tom Cruise and his producing partner Paula Wagner, who together got 30% of the company. The joint venture released only two movies, “Lions for Lambs” and “Valkyrie,” before Wagner departed as chief executive in 2008, leaving the venture in limbo.
MGM said in its 2011 financial results that it now owns a 100% interest in UA and has bought back “Lambs” and “Valkyrie” as well as two later films financed by UA: “Hot Tub Time Machine” and “Fame.”
The company also said it “may resume using the United Artists banner to develop and produce new films.”
The news came as MGM reported financial results to the owners of its stock, which does not trade on public markets.
In a conference call with shareholders, co-CEO Gary Barber said MGM, which paid for 20% of the roughly $100-million production budget for “Dragon Tattoo” — which was co-financed and distributed by Sony Pictures — needed the movie to collect about 10% more revenue to break even.
As a result, he said, although talks with Sony are ongoing for a potential sequel based on the second book in the “Millennium” trilogy by author Stieg Larsson, MGM would participate only “assuming we can achieve better economics” — Hollywood-speak for a lower budget.
“Dragon Tattoo” was the first movie in which MGM invested after it emerged from bankruptcy in late 2010 under Barber and co-CEO Roger Birnbaum. The second, “21 Jump Street,” which was also co-financed with Sony, hit theaters last Friday and looks like a success. Barber said that based on the opening-weekend box office of $36 million, he expects the relatively inexpensive action-comedy, which stars Jonah Hill and Channing Tatum, to be profitable. He added that his studio plans to participate in the sequel, already in development at Sony.
In 2011, MGM reported operating income of $79 million on $699 million in revenue. The company did not provide comparable results for the full year of 2010. A reported 57% of its revenue came from television distribution of its library of more than 15,000 films and television episodes, while 27% came from DVD and Blu-ray sales.
Though MGM stock is not publicly traded, one person knowledgeable about the shares but not authorized to discuss them publicly said the price increased to $26 a share from $24 on Wednesday, the day after financial results were disclosed.
MGM also disclosed in its financial results that Peter Liguori, a veteran TV executive who previously worked at Discovery Communications and Fox, has joined its board of directors.
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