Sony Pictures Swings Back to Profit, Lifts Group Results

Japanese electronics giant, Sony’s pictures division swung back into profit in the 2017-18 financial year, replacing a loss in the previous period.

The division earned $376 million (JPY41.1 billion), on revenues of $9.13 billion (JPY1,011 billion), replacing losses of $682 million (JPY80.5 billion) on revenues of JPY903 billion.

At group level, Sony also increased its profits to JPY491 billion on revenues of JPY8,554 billion.

The pictures division which spans film, home entertainment, television productions and TV networks, particularly benefited from an increase in its global theatrical business. Theatrical revenues climbed 50% to hit $1.51 billion. Networks business also climbed from $2.03 billion to $2.46 billion, though home entertainment and sales of film rights to TV both dropped slightly.

The period included $880 million of gross box office from “Spider-Man: Homecoming,” $946 million from “Jumanji: Welcome to the Jungle,” and the first $222 million from “Peter Rabbit.”

“Media Networks sales increased primarily due to higher advertising and subscription revenues resulting from the acquisition of TEN Sports Network and improved ratings, both in India. Television Productions sales increased due to higher licensing revenues for various U.S. television series including ‘The Goldbergs,’ ‘The Good Doctor’ and ‘Philip K. Dick’s Electric Dreams,’ partially offset by lower television
licensing revenues for catalog product,” the group said.

For the current financial year to March 2019, Sony forecast that pictures division revenues expressed in Yen will decrease due to exchange rate changes, and that operating profits will be “essentially flat.”

Music division sales increased JPY152.3 billion yen (24%) year-on-year to JPY800.0 billion. “This significant increase was mainly due to higher visual media and platform sales and higher recorded music sales. Visual media and platform sales increased due to the continued strong performance of “Fate/Grand Order,” a game application for mobile devices. Recorded music sales increased due to a continued increase in digital streaming revenues. Best-selling music titles included P!nk’s ‘Beautiful Trauma,’ DJ Khaled’s ‘Grateful’ and Camila Cabello’s ‘Camila’,” the company said. Operating income from music increased JPY52.0 billion year-on-year to JPY128 billion.

The announcement came just three months after the dramatic announcement that accompanied Sony’s third quarter results, that Kaz Hirai would step down as group CEO, with effect from April 1. He was to be replaced by Sony’s CFO and head of internal strategy Kenichiro Yoshida.

Yoshida, now installed as CEO, did not take part in the earnings call with analysts and institutions that followed the full year results announcement on Friday. The three senior executives who hosted the call were not required to field any questions about the entertainment division. Discussion focused largely on the booming, but capital intensive, semi conductor unit and the loss-making cell phone production division, which could see its prospects change with the arrival of 5G.

Hirai’s departure came at a time when traditional, studio-organized entertainment was being challenged by industry consolidation and the power of new tech giants. In the intervening three months since Hirai’s announcement Sony has said nothing about a change of course, though the tectonic shifts around the group have continued: with the Disney-Fox deal grinding on; Comcast and Disney both bidding for European pay-TV platform Sky; and Viacom and CBS back in merger talks.

For the new, current year running to end of March 2019, Sony trimmed its group forecasts to a profit of JPY480 billion on revenues of JPY8,300 billion.

$1 = JPY109

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