NEW YORK — Seagram Co. Ltd. lifted net profit 66% to $148 million in its fourth quarter ending in June, largely due to a $154 million profit on the sale of most of its Time Warner shareholding in late May.
Seagram’s Universal Studios Inc. contributed 19% higher cash flow of $105 million on 10% higher revenue of $1.57 billion, driven by a better performance from Universal’s music division. Cash flow is earnings before interest, taxes, depreciation and amortization.
Despite the success of “The Lost World: Jurassic Park,” the film studio’s cash flow rose just 3% to $69 million on 22% higher revenue of $1.03 billion. The studio’s earnings were hit both by a writeoff on its production and distribution deal with the Bubble Factory and by Universal’s conservative accounting policy on marketing expenses for releases.
Universal writes off the marketing costs immediately, delaying the earnings impact of pictures, so the studio’s profits are likely to be inflated by the dino pic in the current quarter.
The studio announced in early June its termination of the Bubble Factory deal, which is expected to end after the release of “For Richer or Poorer” later this year. Seagram did not disclose the size of the writeoff on the deal, but Cowen & Co. analyst Harold Vogel said he estimates the charge to be $20 million to $25 million.
Universal’s music division earned cash flow of $10 million compared with a loss of $11 million a year earlier. Seagram Co. CEO Edgar Bronfman Jr. said, “The music group continued to benefit from investments made in labels and artists during the last two years.”
Universal’s theme park business is also showing “strong growth,” Bronfman said, although the June quarter numbers showed an 18% decline in the recreation group’s cash flow to $26 million. A spokesman for Seagram said the decline was due to the sale during the year of the Putnam Berkley publishing group, whose results were included in the prior year’s numbers.
The quarter concluded Seagram’s fiscal year, when Universal earned 9.6% higher cash flow of $603 million on 9% higher revenue of $6.5 billion.
In contrast, Seagram’s beverages division reported just a 9% increase in cash flow to $230 million for the quarter and $1.04 billion for the year, compared with $956 million in fiscal 1996.
Seagram’s bottom line was inflated by the profit on the sale of 30 million Time Warner shares, done in late May for $1.39 billion. Seagram retains about 26 million shares, which it is expected to sell eventually.
Wall Street analysts said the Seagram numbers were in line with expectations. Seagram stock fell 56¢ Wednesday to close at $34.43.