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WSJ: Sony, Par Missteps Make Them Laggards

By Robert Marich
   March 18, 2017--Sony Pictures and Paramount Pictures are the underachievers among Hollywood’s six major studios due to their own missteps and also “years of underinvestment” by their corporate parents, according to a Wall Street Journal newspaper article.
   Perhaps the most incendiary allegation—and one squarely involving marketing--is that Sony Pictures and Paramount sometimes schedules movie premieres to benefit their respective corporate parent's
Sony suffered a big financial loss on the all-female Ghosbusters remake in 2016

corporate earnings calendar, says the article by Ben Fritz. This involves the so-called “dating” process—selecting premiere dates. The article cites unnamed sources saying those two studios avoid the end of the parent’s fiscal year to instead favor the start of the new fiscal year. That helps reported earnings at the parent-company level.
   “Releasing a movie late in a fiscal year typically means accounting for tens of millions in marketing expenses while waiting until the next fiscal year for the revenue that follows,” says the WSJ. A strategy of favoring start of parent’s fiscal year is “not based on what is best for a film, but in order to maximize short-term profits.”
   Another example of short-term thinking is Sony Corp. pocketing a $180 million one-time payment in 2011 for selling a 25% stake in Spider-Man merchandise to its partner Marvel. Sony still controls Spider-Man merchandise, but less than before.
   “Paramount’s profits have declined for five straight years, most recently reaching a loss of $445 million for the fiscal year ended September,” notes the Ben Fritz article. “Sony Corp. doesn’t report its motion-picture profit separately from television, but recently took a write-down of nearly $1 billion at its studio. It also reduced profit projections for movies after a series of box-office disappointments.”
   The WSJ article notes that, in contrast, other four major studios made large investments in moviemaking in recent years. Walt Disney Co. stretched for multi-billion dollar acquisitions of animation powerhouse Pixar and comic book leader Marvel. Universal Pictures increased total investment in its film slate to $1.2 billion each year, from $850 million (note that the article didn’t address how much of production is funded by third parties, which is the case across Hollywood).
   A reader comment on the article is quite perceptive noting that--while the all-female remake of Sony Pictures’ Ghostbusters is nice for its female empowerment message--the comedy didn’t make economic sense:  Explains the reader: “When you dump $105M of marketing on top of a $145M production budget you know you need to make $500M at the box office just to break even.  That's the elementary school level math of making films.  The film grossed less than a third of that.  If you're a studio exec and you couldn't figure that out before dumping $250M into it then you're just not even remotely good at your job.  It's pretty much just that simple.”
For full text, click links below; text on this website is searchable via searchboxes at upper right of webpages:
https://www.wsj.com/articles/sony-paramount-keen-to-rewrite-their-script-after-years-of-decline-1489669201
http://www.marketingmovies.net/chapters/chapter-10-major-studios/