MGM/UA Has $49.5-Million Quarterly Loss

MGM/UA Entertainment, which has agreed to be acquired by Turner Broadcasting System for an estimated $1.5 billion in cash and stock, posted a fourth-quarter loss of $49.5 million on Friday.

The loss, which compared to earnings of $2.1 million in the same period last year, resulted primarily from an out-of-court settlement of a $100-million lawsuit brought by Rainbow Services Co. over cable-television rights to 1,600 movies in MGM/UA’s film library.

The quarterly deficit brought the company’s full-year loss to $115.8 million, compared to net income of $34.7 million last year.

Rainbow contended that the sale of MGM/UA to Turner Broadcasting violated a $45-million contract giving Rainbow exclusive cable-TV rights to MGM/UA films.

MGM/UA said the settlement called for $50 million in payments to Rainbow. Of that amount, $32.5 million is to be paid by MGM/UA. That amount was listed as a loss in the fourth quarter. The remaining $17.5 million is being paid by Turner Broadcasting.

“The resolution of this dispute clears the way for MGM/UA’s proposed merger with Turner Broadcasting System,” MGM/UA said in its release.

For the three months ended Aug. 31, MGM/UA had revenue of $177.2 million, compared to $138.7 million in the year-earlier period. For the latest year, revenue dropped to $655.2 million from $706.9 million.

For the fourth quarter, film revenue was $57.1 million, a 14.2% increase over a year ago. However, for the full year they declined 31% to $170.3 million.