MGM has only been the sole owner of Epix for a few days, but it’s easy to appreciate why execs seemed so eager to talk up its growth opportunities today as they reported so-so results for the studio in Q1, with gains in TV helping to offset a decline in film — which the company said was “expected.”
MGM paid $971 million for the stakes in Epix previously owned by Lionsgate and Viacom.
They will continue to provide movies to Epix as part of a “multiyear deal,” CEO Gary Barber told the privately held company’s investors.
He sees an additional “value creation opportunity” by expanding the number of original programs on the network.
“MGM is uniquely positioned to deliver must-see premium content,” Barber said. To that end, the company expects to invest “additional capital” to expand the slate of originals. That will “drive meaningful long term growth,” he said.
MGM will record a $124 million non-cash gain in the current quarter to reflect the new value for the 19.1% stake in Epix that it owned before picking up its partners’ stakes. MGM had carried it at $105 million, but the new deal values it at $229 million.
Overall, MGM’s Q1 report showed net income of $35.7 million, down 41.5% vs the period last year, on revenues of $264.1 million, down 15.2%.
Film content revenue of $154.8 million was down 36.3% from last year, which included Spectre and Creed.
Television content picked up some of the slack following delivery of the first season of Steve Harvey’s Funderdome on ABC and The Handmaid’s Tale on Hulu. The unit’s revenues improved 75.2% to $86.4 million.
In addition to the financial disclosures, MGM said it added Google Ventures CEO David Krane to its board. The unit has invested in companies including Uber, Nest, Blue Bottle Coffee and Urban Engines.
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