MGM is reporting third quarter losses

Metro-Goldwyn-Mayer, the parent studio of MGM Home Entertainment is claiming a third quarter loss of over $16 million. Despite good theatrical business, and several successful DVD releases including “Hannibal” and “Silence of the Lambs”, the studio claims that new accounting rules adopted this year are responsible for the losses.

The new rules require studios to record film marketing costs up front rather than over time. Without this stipulation, the studio would have reported net income of $28.2 million, which MGM said was the highest in the company’s 77-year history. As a result of these losses, MGM CEO Alex Yemenidjian is placing the possibility of a merger high on his priority list. “I think we all recognize MGM needs to be part of a larger organization,” Yemenidjian said. “We need to have more scale and we need to have more vertical integration.”

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