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Universal up again

USA, Sci-Fi nets, music bolster third qtr.

Universal Studios cash flow rose 31% in the fiscal third quarter ended March 31 on the strength of its filmed entertainment, music and recreation businesses.

Universal Studios, which comprises the filmed entertainment, music and recreation units of parent company Seagram Co. Ltd., had cash flow — or earnings before interest, taxes, depreciation and amortization (EBITDA) — of $149 million in the latest quarter, compared with $114 million in the year-ago quarter.

“Universal’s overall performance was exceptional this quarter, the second consecutive quarter of (cash flow) growth in excess of 30%,” said Seagram president Edgar Bronfman Jr.

For part of the quarter, Universal enjoyed 100% ownership of USA Networks for the first time after buying out Viacom’s 50% interest. On Feb. 12, Universal traded most of its TV assets for a substantial interest in Barry Diller’s HSN Inc., which has since been renamed USA Networks Inc

USA, Sci-Fi gold

“Our purchase of 100% of the USA and Sci-Fi networks and subsequent transaction with USA Networks Inc. accelerated earnings growth during the quarter, as we expected they would,” Bronfman said. “We remain very optimistic about the outlook for this new business.”

Cash flow from their filmed entertainment segment, which includes TV, cable and film, rose 32% to $115 million from $87 million.

Music climbed 20% to $12 million from $10 million.

Recreation gained 29% to $22 million from $17 million, despite difficult attendance comparisons at Universal’s Florida and Hollywood theme parks.

Films are soft

In the wake of disappointing theatrical releases such as “Primary Colors,” “Blues Brothers 2000” and “Kissing a Fool,” Universal did not take any writedowns on its films. “It was a disappointment, but not a disaster,” said Scott Davis, a securities analyst with Schroder Wertheim & Co.

A $360 million gain on the sale of USA Networks and a $433 million gain on the sale of 15 million Time Warner shares boosted the net income of Seagram to $461 million or $1.34 a share in the latest quarter, compared with $27 million or 7¢ a year ago.

Excluding special items, Seagram reported a net loss of $7 million or 2¢ a share for the quarter.

Total revenues slipped 11% to $2.5 billion from $2.8 billion.

The gains from the disposition of the entertainment assets and strength in Seagram’s Tropicana beverage group offset weak results from the company’s spirits and wine group, which has been hurt by the Asian economic downturn.

Seagram Co. dropped $1 Wednesday to close at $41.32.

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