Hollywood studio Metro Goldwyn Mayer (MGM) has reported a return to profit for the three months to September thanks to profitable TV shows and DVD sales.

MGM's latest film "Barbershop" also helped lift sales with plans for a sequel to boost earnings next year.

The figures surprised analysts, who were expecting a loss rather than a profit for the period.

MGM cheered investors further by saying they would continue to make a profit in the final three months of the year, and use the cash to pay down debt or buy back company shares.

Bond success

The film group reported net income of $11.7m or 5 cents per share for the three months to the end of September, compared to a loss of $16m in the same period last year.

Analysts had expected a loss of 5 cents per share.

MGM attributed its swing into profit to increased home video sales of new and library titles together with the branded MGM television channels.

The company predicted its upcoming film plans, including a sequel to the "Legally Blonde" success, would generate free cash flow of between $100m and $200m in 2003.

"Our balance sheet has never been stronger or more conservative," said chairman Alex Yemenidjian.

This is despite the large marketing budget it has attributed to the launch of its latest James Bond film, "Die Another Day".

The film is the 20th James Bond title and due to be released next month.