The message was unmistakable: TV is the growth engine of Sony Pictures Entertainment.
That was the word spread to Wall Streeters and investors who gathered on the Culver City lot Nov. 21 for the first-ever investor day presentation for Sony’s studio and music divisions.
Michael Lynton, the Sony Entertainment CEO who oversees the Sony Pictures Entertainment and Sony Music operations, made it clear that the studio was in the midst of a “shift in emphasis from motion pictures to television production.”
The numbers tell the tale. According to revenue and growth projections for its fiscal year ending March 31, 2015, Sony Pictures Entertainment estimates revenue of $8.4 billion, with a thin operating income margin of 7.5%.
The growth rate in film production is expected to be flat at best. Television production is pacing at mid- to high-single digits.
For longtime watchers of Sony’s TV production biz, this is a remarkable turnaround from the dark days of a dozen years ago. In late 2001, then-Sony USA boss Howard Stringer shuttered the studio’s entire primetime production operation because it had become such a drain on the bottom line.
Within a few years, Sony inched back into the network big leagues under a new regime led by Sony Pictures TV topper Steve Mosko. Mosko brought fiscal discipline to the business from his background working in Sony’s scrappy syndication unit, which also was an early entrant in the business of producing firstrun cable dramas.
Today, that market is booming, and Sony has seen big returns for its investment in “Breaking Bad” and other shows. The studio takes calculated risks on broadcast network fare such as the James Spader drama “The Blacklist,” which is working out well for NBC so far this season (the studio’s Michael J. Fox sitcom for NBC, not so much).
But the real mojo at Sony, like other TV congloms, is in the less-sexy business of international channels, projected to yield growth in the low- to mid-teens next year.
All of the majors have rushed to grab overseas TV real estate in recent years. Sony generally is seen as ranking No. 3 behind 21st Century Fox and Discovery Communications in international footprint. The studio is up to 127 channels (and counting) serving 150 countries, with a revenue growth rate of 24% during the past 10 years.
Mosko assured investors that the media networks wing “would be the cornerstone of our growth strategy.”
Biz watchers have long wondered why Sony never beefed up its U.S. cable portfolio beyond GSN. Lynton seemed to acknowledge those missed opportunities, leaving the door open for acquisitions in response to an investor question.
“I still think there are a number of cable networks out there that might be good opportunities for us to marry up with,” he said.
The pool of eligible bachelors is pretty small, but let the flirting begin.