Rocky may do well this weekend, but it's more the exception than the rule for MGM. In Spring 2005, MGM became a fee-based movie distribution company. And over a year and a half later I can say that the results are pretty disappointing...
MGM is doing okay -- getting paid a distribution fee and attracting tons of independent producers because of its deal with Showtime (distributing through MGM guarantees producers that they'll sell air rights to showtime; with a fixed price of 70% of the producer box office take, it's a good deal).
But they seemed to have done a bad job of distribution to theaters and marketing many of the films which ends up ripping off many independent financiers. Take a look at these disasters: Flyboys (financed by Larry Ellison - total bomb), Van Wilder II Rise of Taj (Bauer-Martinez - $3.8 million gross), Material Girls (financed by Madonna's company - $11.4 m), Alex Ryder: Operation Stormbreaker (Weinstein Co - gross $650,000), Copying Beethoven (291k), Bobby (Weinstein Co - gross $10 m, $20 m budget).... And a number of so-so performances.
There is an art to distributing to theaters and marketing, and MGM doesn't have the touch. It's deal with Showtime expires in 2008, which will seriously limit its appeal to independents.
Bottom line: this year's performance shows MGM may have done fine for itself this year, but it so disappointed the companies paying it fees -- MGM won't be around for long.
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