Sony: Film Unit on Track for Full-Year Profit Despite Quarterly Loss
UPDATED: On a conference call, CFO Masaru Kato tells a rep for activist investor Daniel Loeb that "Smurfs 2" and "White House Down" came in below hopes, but touts the outlook for the TV programming business.
Sony Corp. may have seen its film unit post a loss in its latest quarter, but management said Thursday that that was not the sign of deteriorating trends in the broader entertainment business.
"It was unfortunate that we recorded a huge loss," CFO Masaru Kato told an analyst call. That was "quite understandable because some of the major films underperformed at the box office," he added, citing White House Down and Smurfs 2.
But he said that Captain Phillips and Cloudy With a Chance of Meatballs 2 were performing according to the company's expectations.
Overall, he said the company remains on track to bring in roughly the same level of profitability in the film unit for the current fiscal year as last year. "This quarter was unfortunate, but this is not because of a structural change," he said.
Last quarter, Daniel Loeb, the activist investor and head of hedge fund Third Point, which owns a roughly 7 percent stake in Sony, was on the Sony call to ask a question and highlight that a music publishing catalog sale was what allowed the film unit to post a profit then. On Thursday, Tim Lash, head of Third Point's tech, media and telecom group, was on to ask if movies were the main reason for the film unit loss. "The motion picture [results were] the cause of this," Kato confirmed.
Asked if the TV networks business was on an upward profit trajectory and had higher margins than the film business, he said: "Basically, yes."
Earlier on the call, Kato had said that TV production and licensing was looking to continue on its growth path long-term, with 13 new series in the 2013-14 U.S. TV season.
Asked if Sony was looking to own networks in the U.S., Sony Corp. of America CFO Steven Kober said that was not part of the company's current strategy. It would continue to focus on providing programming to various networks. Asked about owning U.S. channels, he said, "That is not part of our strategy at the present time. "
Loeb previously pushed for an IPO of Sony's entertainment arm, but has of late taken more of a wait-and-see approach after Sony vowed to disclose more details about its film unit and focus on improving its margins. "Dan Loeb and Third Point shed a light on the entertainment properties that we've been trying to shed a light on for the longest time,"Sony Corp. president/CEO Kazuo Hirai recently said.
Sony is scheduled to hold investor events focused on its entertainment assets in November.
Kato on Thursday also signaled that Sony could eye more asset sales in the future, although not on the scale of last year.