MGM Studios’ third-quarter earnings were Ben-Hurt by its remake of the chariot racing epic, as the $100 million film — with tens of millions more spent on marketing — crashed to just $26 million domestically and less than $100 million worldwide, forcing the company to write down nearly $50 million.
And that “Ben-Hur” letdown overshadowed what was an otherwise solid quarter — especially for MGM’s thriving TV business.
MGM earned $299 million in revenue for the three months ended Sept. 30, which was actually up from $212 million for the same period last year. Net income was down sharply to $12 million, compared with $124 million in last year’s third quarter. The company took a one-time tax benefit of more than $100 million in the third quarter of 2015, but even subtracting that, net income still declined slightly. Adjusted EBITDA, which backs out non-operational expenses like interest and taxes, was down 28 percent to $53.1 million.
In September, MGM warned investors about its film division’s struggles, providing guidance that it expected its annual profit to drop 10 percent from last year, when it earned $431 million. Company executives reaffirmed that projection of about $390 million on a conference call Thursday morning.
MGM took in just $1.9 million in theatrical revenue during the quarter, as it did not yet realize most of the proceeds from “Ben-Hur” and “The Magnificent Seven” — the latter of which did much better at the box office, making $160 million worldwide since its Sept. 23 release. Revenue across the company’s entire film content division grew 25 percent from the same period last year, mainly driven by TV licensing revenue from films, which jumped 28 percent.
At the same time, film operating expenses rose 92 percent, with a $47.8 million write-down — the vast majority pertaining to “Ben-Hur” — being a big part of that.
MGM’s TV division, on the other hand, continues to surge, growing its revenue from last year’s third-quarter by 108 percent to $95.8 million. Both scripted and reality TV contributed to that growth.
MGM produces the History Channel’s “Vikings,” which will air the second half of its fourth season during Q4 this year, and was picked up for a 20-episode fifth season.
And the company’s unscripted television, headed by reality TV legend Mark Burnett, who was named head of MGM’s Television and Digital Group in January, has several long-running network hit shows. ABC’s “Shark Tank” began its eighth season in September, NBC’s “The Voice” has been picked up for 12th and 13th seasons and CBS’s “Survivor” has been renewed for a 34th.