Sony Pictures enjoyed a leap in operating profits in the second quarter of its fiscal year. Boosted by such hits as “Spider-Man: Far From Home” and “Once Upon a Time in Hollywood,” the unit (which includes both film and TV operations) showed a profit of $366 million. That compared with a $3 million profit in the first quarter, and a $211 million profit in the equivalent second quarter of last year.
The unit is part of Japanese electronics and entertainment group Sony, which on Wednesday unveiled its financial results for the July-to-September period, the second quarter of its financial year, which runs to the end of March 2020.
Overall, Sony’s revenues were down 3% in local currency terms at JPY2.22 trillion ($20.6 billion), but net profits increased by 9% to JPY188 billion (or $1.74 billion at current exchange rates). Earnings per share came out at more than JPY148, compared with investment analysts’ consensus forecast (as reported by Seeking Alpha) of JPY122 per unit of stock.
The music division also showed strong gains. Revenue in the quarter increased by 8% to JPY219 billion ($2.03 billion), despite currency headwinds. Operating income increased from JPY31.5 billion ($291 million) to JPY37.5 billion ($375 million).
The games and network services saw sales and revenues move in the opposite direction. Games revenue dropped 17% from JPY550 billion to JPY454 billion ($4.20 billion). Operating income slid in tandem from JPY95 billion to JPY65.4 billion ($605 million).
Supplementary data to Sony’s regulatory filing showed that “Spider-Man: Far From Home” had gross box office of $1.13 billion worldwide. Quentin Tarantino’s “Once Upon a Time in Hollywood” grossed $356 million, and “The Angry Birds Movie 2” took in $125 million. In the same quarter last year, revenues from four releases, including “Hotel Transylvania 3” and “The Equalizer 2,” added up to only $828 million.
Sony has revised its full-year profit forecasts for all three content divisions, increasing those for pictures and music but trimming its estimates for games. For the 12-month period, Sony now expects the pictures division to deliver slightly decreased revenues of JPY1.03 trillion and operating profits of JPY70 billion. That compares with a previous forecast of JPY65 billion and actual 2018-19 sector profits of JPY54.6 billion (reported at the then-prevailing exchange rate as $459 million).
In June, Sony received notice of a corporate breakup proposal by activist investor Daniel Loeb and his Third Point Fund, which has amassed a $1.5 billion stake and called Sony one of the most undervalued large-cap stocks in the world. In a sharply different approach from his 2013 assault on the company, when he proposed the disposal of the entertainment businesses, this time Loeb suggested that Sony keep entertainment and sell off its semiconductor activities. (Third Point is a shareholder in Variety, alongside Penske Media Corporation.)
In its July financial report, Sony rebuffed the breakup proposals, but said it would continue to look at its business structure.
“We have received proposals about our business portfolio. Such proposals are examined carefully, in depth and seriously. We are currently examining them in depth,” senior executive VP and Sony CFO Hiroki Totoki said on a conference call in July. He also described Sony’s image sensors business as “a pillar of the group.”
More recently, Sony announced that it will shut down its live TV subscription service PlayStation Vue, on Jan. 30, 2020.
“Unfortunately, the highly competitive pay-TV industry, with expensive content and network deals, has been slower to change than we expected,” Sony said in a blog post. “Because of this, we have decided to remain focused on our core gaming business.”
Sony launched PlayStation Vue as an internet-based pay-TV service in early 2015. “We had ambitious goals for how our service could change how people watch TV, showcasing PlayStation’s ability to innovate in a brand-new category within the pay-TV industry,” the company said Tuesday.