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MGM pleased with 'better than expected' third quarter results

Metro-Goldwyn-Mayer(MGM) has posted 'better than expected' third quarter earnings,powered by revenues from its film and television library, increased televisionprogramming and the number one comedy, Barbershop.

Revenuesfor the third quarter ending Sept 30, 2002 were $381.2m compared to $393.3mfrom the same period last year. The studio also reported net income of $11.7m,overturning a $15.9m loss in the third quarter of 2001, and tripled its EBITDA(earnings before interest, taxes, depreciation and amortization) to $28.7m from$9.2m in the same period last year.

MGMchairman and chief executive officer Alex Yemenidjian said in a statement:'As we approach 2003, our investments in film and television productionover the past three years will generate significant free cash flow. Theseimproved fundamentals, combined with the strongest balance sheet that MGM hasever had, allow us to look to the balance of this year and to 2003 with greatconfidence.'

Thefigures could hardly have come at a better time for the beleaguered studio,which this year has had to endure persistent takeover rumours, the smallestmarket share of all the US majors (2.7%) and a string of ignominious flopsincluding Windtalkers, Hart'sWar and Rollerball.

Howeverthe release of Barbershop, whose$68.9m gross from six weeks marks the birth of a potentially lucrativefranchise, has produced a rosier near-term forecast, as has the success ofMGM's 4,000-title library - the jewel in its crown. A recent report by LehmanBrothers attributed more than 90% of the studio's equity value to the library,which has seen its home entertainment market share grow to 17%, an increase ofalmost 50% this year.

In addition the studio haslaunched two international channels in Africa and last week announced a dealwith German pay TV platform Premiere that will see an MGM-branded channel goout in Germany and Austria in the second quarter of 2003. The scheduled Nov 22release of the 20th James Bond instalment, Die Another Day, should provide another boon. The Bond franchise isregarded as MGM's second most valuable asset after its library.

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