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MGM records 1Q loss
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April 27, 1999: 12:32 p.m. ET
Company officially names casino unit chief Yemenidjian chairman and CEO
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NEW YORK (CNNfn) - Fewer box-office hits and a one-time charge to regain control of the distribution of its home video products prompted Metro-Goldwyn-Mayer Inc. to post a first-quarter loss of $306.6 million, or $2.03 per share, compared to a loss of $18.6 million, or 28 cents per share, in the year-earlier period.
Earnings before interest, taxes, depreciation and non-film amortization for the quarter reflected a loss of $280.3 million compared to a profit of $7.1 million in the first quarter of 1998. Neither First Call Corp. nor Zacks tabulated analysts' earnings expectations for MGM's current quarter.
The loss was mostly a result of a $225-million contract termination fee paid to Warner Home Video, MGM (MGM) said. Still, the fee now allows MGM to regain control over the distribution of its home video products, which should help boost profits in subsequent quarters, the company said.
Sales for the quarter totaled $258.6 million, down 19 percent from the $316.5 million it earned in the year-earlier period. Most of the revenues were from feature films -- $196 million -- with the remainder from television programs and other entertainment projects.
MGM produces and distributes entertainment products, including motion pictures, television programming, home video, interactive media, music and licensed merchandise. The company also boasts of the world's biggest film library. MGM's operating units include MGM Pictures, United Artists Pictures, MGM Music and MGM Interactive, among others.
Separately, MGM officially named Alex Yemenidjian -- the former head of its casino and entertainment unit MGM Grand Inc. (MGG) -- chairman and chief executive of the company, confirming what was already widely anticipated by industry watchers.
The proclamation places 43-year-old Yemenidjian in Frank Mancuso's seat as head of the Santa Monica, Calif.-based entertainment concern. Mancuso, 65, will continue as a director of the company. Vice Chairman Robert Pisano, 56, who joined MGM with Mancuso, also stepped down from his position and from the board.
MGM, which is controlled by investor Kirk Kerkorian's Tracinda Corp., also said it will have rights to raise approximately $500 million in equity to fund production of more television shows and feature films. The rights offering will give existing MGM shareholders a chance to buy additional stock at a discount.
Yemenidjian has been a senior executive at Tracinda and has also been a director and chairman of MGM's executive committee.
MGM shares fell 1-15/16 to 13 7/8 in midmorning New York trading. MGM Grand shares fell 1/16 to 43-1/2.
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