NEW YORK — Showbiz congloms unleashed a flood of corporate earnings reports last week, with an unusual twist — film studios brought home the bacon.
Those Hollywood hypesters, whose Byzantine financials Wall Street loves to hate, were a bright spot in nearly every instance, from Disney to Viacom to Sony to USA, as a slow economy weighed down ad-dependent sectors like TV and radio broadcasting.
Ironically, robust quarterly numbers arrived just ahead of possible writers and actors strikes this spring and summer.
“If you had to draw sort of a line in common with most of the earnings, the studio divisions held up well,” says Kathy Stymponias of Prudential Securities.
Costs were down and almost all of them, notably Walt Disney, mentioned DVD as a real growth engine.
Wall Street hopes the booming format heralds “the start of a positive trend for these guys that they’ve been sorely missing,” she adds.
Operating profit at the Mouse’s studio entertainment unit surged to $164 million from $46 million. Pics like “O Brother, Where Art Thou?” and “Disney’s Recess, School’s Out” were up against the disastrous “Mission to Mars” the year before.
“Lady and the Tramp II: Scamp’s Adventure,” “Remember The Titans” and “Dinosaur” sold briskly in both VHS and DVD.
Disney took a massive $820 million writedown for shuttering its Go.com Internet biz and a smaller hit for closing some Disney stores. The conglom still posted an 11% hike in net income to $307 million (up 33% excluding the charges). Revenue eased 4% to $6 billion.
Broadcast operations, which buttressed profits for many quarters, softened along with the economy. Consumer products is still in the midst of a major revamp.
At Viacom’s entertainment biz, led by Paramount, cash flow rose 17% to $64 million and revenue was up 14% to $595 million. New releases during the quarter included “Save the Last Dance,” “Down to Earth” and “Enemy at the Gates.”
Studio toppers Jonathan Dolgen and Sherry Lansing “are totally focused on making profitable movies,” crowed chairman-CEO Sumner Redstone.
In a pro forma comparison (as if last May’s purchase of CBS was included in both periods), revenue companywide rose 6% and cash flow rose 15%. Higher amortization of goodwill associated with that deal, however, pushed Viacom to a net loss of $7 million from a $68 million profit.
Sony, fresh off a spate of Oscars for “Crouching Tiger, Hidden Dragon,” said quarterly revenue at Sony Pictures surged 26% to $1.5 billion. Operating income hit a new high, up 17% at $156 million.
Total revenue for the electronics behemoth rose 16.5% to $15.4 billion and operating losses narrowed to $25 million.
Feast for U
Universal Studios’ Paris-based parent Vivendi Universal enjoyed double-digit cash flow gains throughout its media holdings, with split-rights revenue from the movie “Hannibal” hoisting film results. At U Studios, cash flow increased dramatically to $121 million from $2.7 million, although revenue declined.
Total revenue rose 10% and cash flow surged 112%.
U’s “Hannibal” partner, MGM, also raked in the bucks from the sequel and from robust home-entertainment sales. The stand-alone studio swung to a quarterly loss of about $400 million from a $5.2 million profit after taking an expected $400 million charge, as its peers have already done, for new film accounting rules.
Absent that item, execs touted some $12.6 million in net income. Lion revenue was about flat at $344 million.
Even USA Networks chief Barry Diller had a kind word to say about movies, as USA Films was driven to new highs with sensation “Traffic.” Revenue at the unit jumped to $51 million from $30 million. Cash flow swung to plus $2.2 million from a $1 million loss.
Total company revenue rose 18% to $1.3 billion. Net losses, which stem, USA says, from a complex capital structure it is planning to change, narrowed to $19.5 million. Taking that into account, USA said it actually posted a pro forma profit of $11.6 million.
(Carl Diorio contributed to this report.)