Sony Pictures Returns to Q1 Profitability1 Aug, 2013 By: Erik Gruenwedel
Reversal of year-over-year loss due primarily to sale of music publishing unit
Sony Pictures Aug. 1 reported first-quarter operating income of $38 million, compared with an operating loss of $49.5 million during the previous-year period. Revenue increased 3.6% to $1.6 billion due primarily to the favorable impact of the depreciation of the yen against the U.S. dollar.
The studio, which includes Sony Pictures Home Entertainment, said actual sales decreased significantly (16%) due to lower theatrical and home entertainment revenue. Indeed, the previous-year period included the theatrical release of Men in Black 3 compared with the underperformance of After Earth — both films ironically starring Will Smith.
The studios performance was anticipated by activist investor Daniel Loeb, who, in a July 29 letter to investors, criticized Sony Pictures management and poorly performing theatrical titles.
Loeb, whose hedge fund controls 7% of Sony Corp.’s stock, said the studio should be spun off from the parent company.
In a statement, released July 29, Sony Corp. said it is focused on creating shareholder value by executing on its plan to revitalize and grow the electronics business, while further strengthening the entertainment and financial service businesses, which generate stable profit.
“The Sony board of directors, as previously noted, is reviewing its proposals,” Sony said. “Sony looks forward to continuing a constructive dialogue with our shareholders as we pursue our strategy.”