Sony watch: studio facing challenges

sonylogo

UPDATE (May 21): The Nikkei news service in Japan has reported that Sony Corp. is considering a spinoff of its entertainment business. Nikkei has an English Web site but to access THE STORY you have to be a subscriber. If you CLICK HERE, you can view a Los Angeles Times story that summarizes the Nikkei piece.

According to a BLOOMBERG.COM STORY, Sony shares climbed to their highest levels in more than two years after the Nikkei report.

ORIGINAL POST: The New York Times, IN THE LEAD STORY IN ITS MAY 19 BUSINESS SECTION has a detailed story about challenging times at Sony Pictures, the entertainment arm of Sony Corp.

One problem: it’s not as profitable as other studios, even with Agent 007 in its portfolio. According to reporters Brook Barnes and Michael Cieply, Sony’s operating margin was 6.5 percent and “figures at Warner Brothers, Disney, Paramount and 20th Century Fox were all higher.”

Here’s an excerpt with part of the explanation:

SONY’S $4.4 billion in ticket sales last year was impressive, but shareholders care about profit margins.

The movie studio’s bottom line didn’t look better for several reasons. For one thing, about 75 percent of the “Skyfall” revenue went to Metro-Goldwyn-Mayer after James Bond rights holders took their cut. Revenue from some DVD titles — “Zero Dark Thirty,” for instance — will come in the next fiscal year. But more important, “Men in Black 3” cost an arm and a leg, and when you’re making this many movies some are bound to miss: Sony’s hits were offset by the major flops “Total Recall” and Mr. (Adam) Sandler’s “That’s My Boy.”

Thus, in the case of Skyfall, which Sony distributed, the studio was third in line after the Broccoli-Wilson family and Metro-Goldwyn-Mayer.

Another challenge is investor Daniel Loeb, whose Third Point LLC, acquired a 6.5 percent stake and wants Sony Corp. to sell of 20 percent of its entertainment business and focus on its consumer electronics unit. Loeb, according to the Times, “specifically complained” about profitability of the entertainment unit. Sony said the entertainment business wasn’t up for sale.

Sony’s Columbia Pictures has distributed the last three 007 films (Casino Royale, Quantum of Solace and Skyfall) and is contracted to do so again for Bond 24 whenever it’s made.

For the complete NYT story, CLICK HERE. For more, you can CLICK HERE for a May 16 Bloomberg.com story headlined “Sony’s $100 Billion Lost Decade Supports Loeb Brakeup.” You can also CLICK HERE for a May 14 story by the Deadline entertainment news Web site.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: