MGM/UA Entertainment Profits Jump in Quarter

Bolstered by increased revenue from home video and pay television, MGM/UA Entertainment Co. on Tuesday reported net income of $14.26 million in its third fiscal quarter, up from $5.58 million last year, despite an 11% drop in operating revenue.

The Culver City-based movie company said certain tax benefits and the strong box-office performance of its latest James Bond film, “A View to a Kill,” also contributed to the earnings improvement for the three months ended May 31.

The Bond movie grossed $16.3 million at the box office in its first seven days of release, which occurred at the end of the third quarter, MGM/UA Vice President Arthur Rockwell said, noting that, as of July 8, the film had generated a total of $45.8 million in box-office receipts.

Due to a second-quarter pretax loss of $99.15 million, Rockwell said, the company is now reporting an income tax benefit of $11.86 million for the third quarter, compared to an income tax provision of $6.15 million made during the same period last year. For the first nine months, the company reported an income tax benefit of $32.22 million, compared to a tax provision of $23.50 million last year.

MGM/UA reported operating revenue of $145.03 million for the third quarter, compared to $162.07 million a year earlier, reflecting decreased revenue in its motion picture and television distribution businesses.

Home video and pay-TV revenue rose 34% to $59.32 million for the third quarter, while the company’s film laboratory revenue increased 37% to $14.05 million. For the nine-month period, MGM/UA reported operating revenue of $477.96 million, down 16% from $568.53 million last year. The company reported a net loss of $66.24 million for the nine months, compared to net income of $32.56 million last year.

As previously reported, MGM/UA has licensed some of its films on a non-exclusive basis to two pay-TV services in a long-term deal that MGM/UA estimates will generate at least $75 million over the next 10 years.

In a separate announcement, MGM/UA said Tuesday that it will move all of its Los Angeles employees to Culver City for the first time since United Artists was acquired in 1983, with a plan to lease offices in the Filmland Corporate Center, currently under construction on a site just east of MGM/UA’s main gate.