Media muscles up but qtr. pinches pix

Slim pic slate due to bad luck, corporate parents cutting costs

NEW YORK — Amid SARS, Saddam and a sluggish economy, showbiz congloms sowed a surprisingly solid set of financial results last week.

Viacom and AOL Time Warner were profitable in the March quarter. James Bond slashed MGM’s losses and Spider-Man saved Sony. The numbers buoyed stocks and reassured jumpy investors.

Generally, though, among all their divisions, execs glossed quickly over the lagging perfs of Hollywood studios in the first three months. Output slowed to a trickle with few real winners — thanks to a blend of bad luck and corporate parents looking to cut costs.

Viacom’s entertainment division saw operating income plunge nearly 50% because, it said, Paramount released fewer pics than the year before — only three, in fact.

Par “is basically laying off everything, all the risk. It’s being run not to lose money — not to make money,” says one longtime media analyst.

The pic slate was also leaner at Warner Bros., which was buoyed by DVD and video but saw theatrical revenue drop on fewer releases. Execs even pointed out that a skimpy release schedule saves a lot on prints and advertising.

The first three months were pretty lame, acknowledges one studio exec. “We didn’t put much out there, and certainly not much that people wanted to see.”

But the pace is picking up, as the traditionally lucrative summer B.O. season looms.

About 56 studio pics will hit theaters between now and September — almost three per weekend, says Dennis McAlpine of McAlpine & Associates. That includes a glut of franchises and sequels — another reflection of corporate ownership by risk-averse parents.

“I think we’re reaching a point where something will have to change in the film business,” says another Wall Streeter. “There are only a few big players. The economics are very challenging.”

The stars of the quarter were cable networks — from MTV to Turner to HBO — as the ad market held strong after an initial jolt from the war with Iraq. National advertising was the most durable. Viacom swung to a $443 million profit from a $1.1 billion loss the year before. Revenue rose 7%.

And in a reversal of sorts for AOL TW, troubled America Online is no longer dragging its parent down — at least not too much.

It “has become a benign tumor. It’s lost its malignant status. You can actually slap some makeup on it and you don’t even notice it,” joked CNBC host James Cramer after the parent company swung to a $396 million profit from a $54 billion loss the year before.

Wall Streeters also liked AOL TW’s sale of its half of Comedy Central to Viacom for $1.2 billion. Video and DVD and the WB net were also top performers.

MGM cut its quarterly net losses from $90 million to $55 million as revenue jumped 25% to nearly $400 million.

Bucking the herd, Sony reported that film was the best thing to happen to its fiscal year ended in March. “Spider-Man” and several other summer pics boosted operating income at Sony Pictures by 88% to $400 million.

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