Reversing a trend, Sony Pictures Entertainment has posted an uptick in its first quarterly report of fiscal 2019. Unveiling Q1 results in Tokyo on Tuesday, the electronics and entertainment giant said earnings at the film division rose to $3.7 million (400 million yen) versus a $68M loss in the comparable period last year. Executives on an earnings call noted this was the first time the division has seen a first-quarter profit in five years.
Sales rose 6% year-on-year to $1.7 billion (186.1 billion yen) during the period ended June 30 thanks in part to higher theatrical revenues from Men In Black: International and Spider-Man: Far From Home, Sony said. The latter title, which recently topped $1B at the global box office to become the studio’s second highest-grossing film ever, did not begin its full worldwide release until the start of July so will be weighted to Q2 earnings and beyond.
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The latest Men In Black was an underperformer with $213M in the quarter (although Sony was fiscally smart in covering its risk on the reboot), but last year had no major titles during the comparable period. In total, films released during the current quarter generated $280M globally. Those include The Intruder ($36M), Brightburn ($31M) and MIB. That compares to $34M combined for Superfly and Sicario: Day of the Soldado in the same period of 2018.
Also on the plus side for sales in the Pictures segment were higher television licensing revenue for catalog titles. Helping profits were lower sports marketing and programming costs in India and better home entertainment revenues at Funimation. Higher theatrical marketing costs in support of Men In Black and Far From Home, were a drag, however, the company said.
Upcoming in the second quarter, Sony will include the bulk of Far From Home’s success as well figures for Quentin Tarantino’s just-released Once Upon a Time In Hollywood which is due to roll out internationally through August. The Angry Birds Movie 2 is also on deck in the coming month.
The full-year operating income forecast for the Pictures division is flat with what was projected in April at 65B yen ($598M at today’s rates).
Overall, Sony saw a 1% year-on-year revenue drop to $17.5B while operating income grew 18% to $2.1B, beating market expectations thanks to a strong performance in the image sensor business, while the music division posted $353M in profits. Net income across the company was down 33% to $1.38B. The full-year profit forecast was maintained at 810B yen ($7.5B). Reuters notes that Sony is now facing headwinds in the gaming business which is expected to see higher costs to develop a next-generation console as the PlayStation 4 nears its sell-by date.
This is the first earnings report from Sony since activist investor Daniel Loeb launched a new proposal to break up the conglomerate in mid-June. Loeb, whose Third Point hedge fund has accumulated a $1.5B stake in Sony since first investing in 2013, called the company “one of the most undervalued large cap businesses in the world today” and outlined ideas for how it should be divided and organized. (Third Point and Deadline parent Penske Media Corp. teamed to purchase Deadline’s sister publication Variety in 2012.)
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