MGM Studio Reports Profit From ‘Bond,’ ‘Hobbit’ Releases

MGM Holdings Inc., the studio that emerged from bankruptcy more than two years ago, reported fourth-quarter net income of $40.2 million, driven by the James Bond film “Skyfall” and “The Hobbit: An Unexpected Journey.”

Fourth-quarter revenue soared almost sevenfold to $902.6 million, the closely held Beverly Hills, California-based company said today in an e-mailed statement. The studio posted a loss of $11.2 million a year earlier.

MGM is basking in renewed success as the studio weighs an initial public offering. “Skyfall” and “The Hobbit” took in more than $1 billion each in worldwide ticket sales, according to Box Office Mojo, and MGM is counting on future versions for years of profit. “The Hobbit: An Unexpected Journey,” a co-production with Time Warner Inc., was the first of three planned films based on J.R.R. Tolkien’s novels.

“Nobody expected ‘Skyfall’ to do more than $600 million at the box office,” Steven Azarbad, a portfolio manager at New York-based Maglan Capital LP, which owns about 1 percent of MGM, said before the release. “Together with two more ‘Hobbit’ films, a remake of ‘RoboCop’ and Brett Ratner’s ‘Hercules,’ the film slate looks exceptionally strong for years to come.”

For its second calendar year of operations since emerging from bankruptcy in December 2010, MGM reported 2012 profit of $129 million on revenue of $1.38 billion, the company said. The studio plans a private call with investors at 12:30 p.m. New York tomorrow and will make a replay available after 7 p.m., according to the statement.

Future IPO?

Along with an IPO, the results may signal a new era of financial stability for MGM, the maker of classic films including “Gone With the Wind” and “The Wizard of Oz.” Including the 2010 bankruptcy, the studio has changed hands at least eight times since 1969.

Billionaire investor Kirk Kerkorian acquired and sold the studio three times during the period.

MGM Holdings said in July it submitted a confidential IPO filing to regulators through a process that lets the owners gauge potential interest before moving ahead.

Proceeds from a stock sale could be used to pay for film production or go to investors that include Anchorage Capital Group LLC, Highland Capital Management LP and Solus Alternative Asset Management LP, which have board seats.

The studio refinanced its debt in January, securing $650 million in loans for film production and digital ventures, people familiar with the transaction said at the time. The loans lowered interest rates and replaced a $500 million facility arranged in February 2012, the people said.

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