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Universal Studios Q4 Operating Cash Flow Drops 47%

15 Feb, 2012 By: Erik Gruenwedel


‘Bridesmaids’ and ‘Fast Five’ not enough to offset slumping home entertainment

Universal Studios Feb. 15 reported fourth-quarter (ended Dec. 31) adjusted operating cash flow of $91 million, down 47.6% from adjusted operating cash flow of $172 million during the previous-year period. For the year, adjusted operating cash flow (sometimes called operating income) plummeted 95.8% to $10 million from operating cash flow of $230 million in 2010.

The studio, which includes Universal Studios Home Entertainment, said Q4 revenue dipped slightly to $1.26 billion, compared with revenue of $1.28 billion during the previous-year period. For the year, studio revenue remained flat at $4.5 billion.

The subdued results come despite box office hits Fast Five and Oscar-nominated comedy Bridesmaids. Fast Five generated more than $626 million in worldwide ticket sales, including $209 million at the domestic box office. Bridesmaids generated $288 million in global box office, including $169 million domestically.

Indeed, Bridesmaids is the top-selling transactional video-on-demand title in history, with more than 4.8 million rental orders since its Sept. 20, 2011, release, according to the studio. The ‘R’-rated female-driven comedy has grossed more than $24 million on VOD. When factoring in other digital platforms, including iVOD, pay-per-view, hotel viewings and electronic sellthrough, the title has totaled more than 7 million orders with grosses of $40 million domestically.

Bridesmaids also generated more than $100 million in Blu-ray Disc and DVD sales in the United States. Starring Melissa McCarthy (nominated for Best Actress in a Supporting Role) and Kristin Wiig (nominated with Annie Mumolo for Best Original Screenplay), the movie is available electronically through Feb. 29.

Regardless, Universal cited lower home entertainment and related revenue, partially offset by higher content license revenue (i.e. services such as Netflix and Amazon Prime) for the studio revenue decline. The studio also incurred higher marketing costs in Q4 in advance of the 2012 theatrical slate.

Parent NBC Universal said the underperforming 2011 theatrical release slate of 15 movies was unable to match the 2010 slate (also 15 releases) primarily due to that year's hit Despicable Me, which generated $543 million at the global box office, in addition to 3.75 million discs sold during the first week release at retail.

Steve Burke, CEO of NBC Universal, admitted the film business did not perform well in 2011.

"We think we can see some improvement in film," Burke said, adding that studio management is doing a "very good" job in advance of the 2012 release slate.

"We're very optimistic about [the slate]," he said.

Separately, despite a strong ratings week due to the Feb. 5 Super Bowl telecast, Burke reiterated that it would take several years to turn around the fortunes of the NBC network. He said singing program "The Voice" would be integral to rebuilding NBC.

"That is [also] going to be a multiyear effort," Burke said.

Finally, NBC broadcast generated a $305 million increase in license fees in 2011 due to last summer's SVOD agreement with Netflix for episodes of "The Office" and "Parenthood," among others.

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