MGM Profits Up For Third Quarter Even As Revenue Dips

ABC/Tony Rivetti
Shark Tank is one of the shows MGM acquired an interest in from Mark Burnett

The closely held company also revealed that it paid $343.8 million for a 55 percent interest in Mark Burnett’s company

It was another strong performance for MGM Holding’s Metro Goldwyn Mayer, which on Thursday reported net income for the third quarter of 2014 was $28.5 million, up from $16.5 million in the same quarter of last year.

MGM also revealed for the first time that it paid $343.8 million for a 55 percent interest in United Artists Media Group, which is a joint venture of producer Mark Burnett, his wife actress Roma Downey and Hearst Productions.

The acquisition had been previously reported. It gives MGM a position in a number of TV shows including Shark Tank, The Voice, Survivor, Apprentice, longform projects such as The Bible and theatrical films including Son of God. United Artists Media Group also has an upcoming 12 episode scripted TV series called A.D. that will air on NBC, and is developing a number of new unscripted shows, according to the filing.

For the quarter, MGM revenue came in at $234 million, about $9 million lower than the same quarter in 2013.

In a note in the report, MGM said the lower revenue was expected as 2013 included significant results from the James Bond film Skyfall, which began its global pay TV and SVOD distribution in that quarter of 2013.

MGM said the drop was “largely offset” by revenue from the home entertainment release of RoboCop, and higher revenue from TV content and previously released films.

Read more Skyfall: Film Review

For the nine months end Sept. 30, MGM reported revenue of $886 million compared to just over $1 billion in the same period of 2013. That was because last year they had Skyfall and The HobbitThe Desolation of Smaug in global release.

Home Entertainment revenue worldwide was $42 million for the quarter, compared to $34 million in the same time frame in 2013. That also included continuing revenue from the home video release of The Hobbit: The Desolation of Smaug.

Skyfall was also the fall guy for why TV revenues were down from $166 million in 2013 to $151 in the third quarter of 2014. The prior year was when Skyfall was licensed to Epix pay TV and for SVOD. The prior year also included the initial international licensing of The Hobbit: An Unexpected Journey.

For the nine months, MGM collected an $8.6 million dividend from its 19 percent interest in Epix. It also recorded $15.8 million of earnings from Epix on its profit and loss statement. 

Investors found cheer in the EBITDA (cash flow) for the third quarter, which was about $68 million — a 6 percent increase over the $64 million in the same quarter of 2013. The company attributed the increase in part to the strong international home video results.

The company said EBITDA also benefited from the strong performance of three TV shows — Fargo, Teen Wolf and Vikings — as well as revenue from previously released movies such as 22 Jump Street and Carrie.

For the nine months ending on Sept. 30, EBITDA was $249 million, down from $272 million in 2013. The company said that was because in 2013 it had Skyfall and Hobbit in international release where they performed strongly.

The cash on hand was also way up. It was $218 million as of the end of the third quarter compared to $42 million the prior year at the same time.

The bank debt was up because MGM recorded its new term loan of $300 million.

The price of MGM’s stock on Thursday was $73.50 a share, down from the high it hit when the Skyfall and Hobbit revenues were flowing but still very strong. MGM shares are traded on the private market. The company at one time discussed doing an IPO but has not moved forward with that. 

CORRECTIONS: 11/13 at 1 p.m. - The exact price paid for Mark Burnett's company was corrected. MGM does not file with the SEC. Epix dividend information was corrected. The new term loan did not replace a revolving credit line, and the company still also has a revolving credit line.