Sony Pictures Vows To Cut Costs $250M+ Through 2016

At least $150M of the total will come from overhead and “operational efficiencies” with the rest from changes in procurement practices, CFO David Hendler told investors today at Sony‘s presentation about the entertainment business. “We’ve taken a hard look at head count.” It is also re-bidding contracts telling those wanting Sony’s business “to come to us with the most aggressive pricing possible.” He reiterated the company’s zeal to reduce film production costs, noting that actors and directors will profit after productions break-even and that Sony will “penalize talent for cost overruns.” Sony plans to ramp up animation, in part because talent costs are lower than they are for live action. Even so, Hendler says that the company will focus on long term profitability and will spend on initiatives that may “limit [Sony’s] margins during the investment phase.” For example, between 2007 and 2013 the company spent $415M on media networks (including Crackle and GSN), $960M on cable and broadcast TV production (including Blacklist and Breaking Bad), $762M on animation (e.g. The Smurfs and Hotel Transylvania), and $1B for worldwide acquisitions (e.g. Evil Dead and The Call). The company has mixed expectations for revenue growth at the major units: Motion Pictures, which generated $5.4B in the year that ended in March, should be flat to slightly down each year into 2017. Television productions (at $1.9B in FY 2013) will be up by mid- to high-single-digit annual rates. And Media Networks ($1.5B) will be up low- to mid-teens. The presentation doesn’t appear to have moved many investors: Sony’s shares are up 0.6% at midday, in line with the overall market.

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