Sony Entertainment Touts Financial Discipline, Announces Reduced Film Slate
UPDATED: Michael Lynton also lauds the studio's work with big-name talent, such as Will Smith and Adam Sandler, while Amy Pascal says the firm is reducing its number of summer movies next year from nine to four after this year's crowded tentpole summer.
Sony is further trimming its film slate, including plans to release four movies in summer 2014, down from the nine released during the summer months this year, said Amy Pascal, co-chairman of Sony Pictures Entertainment and chairman of Sony Pictures Entertainment Motion Picture Group.
Pascal attributed the decision to slash movies to "an increasingly crowded summer," and made the announcement Thursday during the Sony Entertainment Investor Day in Los Angeles. Pascal also spoke of a refined greenlighting process that will lead to about 18 movies a year, whereas Sony has typically released about 20-23 films annually.
At the event, Sony Entertainment CEO Michael Lynton promised a "significant shift from motion pictures to higher margin television production and networks," and he told investors he'd cut $250 million in costs over the next two years.
"We take a hard look at talent deals, which have been reformed in recent years," he said of the film business. He added that Sony these days looks to keep shooting days to a minimum and get the most out of tax incentives. "We are proud of our record of financial responsibility," but not satisfied yet, he said.
"We must continuously study and learn from our misses," Lynton said about recent box office failures. Lynton also also touted the studio's just-announced plan to cut $100 million in annual costs with the help of consulting firm Bain & Co.
Columbia Pictures is "still the workhorse" at Sony Pictures, Lynton said, but also mentioned other labels, such as Screen Gems, Tristar, Sony Pictures Classics and Sony Pictures Animation.
He also highlighted strong talent relationships with the likes of Will Smith, Adam Sandler, Jonah Hill, Emma Stone, Justin Timberlake and Katherine Bigelow, though, he noted, "this is not about giving talent perks."
Even big names must meet Sony's standards for profitability. As examples, he said the studio has at times been telling actors "we won't make (the) film in a city of their choice," he said. And the studio is "putting directors on the financial hook" for budget overruns.
During the presentation, executives seemed to be addressing specific cost-control concerns famously raised recently by Daniel Loeb, an activist shareholder who owns a 7 percent stake in Sony.
Sony Pictures Entertainment CFO David Hendler, for example, further stressed financial discipline at the film studio. He promised "more aggressive profit thresholds" and a "methodical examination of every line item." Hendler also said the studio would "penalize talent for budget overruns" and he promised "further reductions in theatrical marketing," including media, print and outdoor.
From 2013-2017, Hendler said, Sony Pictures Entertainment would sport low- to mid-single digit growth, but the film studio itself would be flat to slightly down.
Loeb has also pushed for a spinoff of Sony's entertainment assets, but Sony Corp. CEO Kazuo Hirai seemingly shot down such a play by saying: "I know that the whole of Sony is greater than the sum of its parts ... Sony Entertainment is a core part and is crucial to future growth."
Lynton emphasized the point by lauding the film and TV studio's "ownership by one of the world's most innovative electronics companies."
Discussing the TV production, Lynton said growth in original programming and international markets have boosted that business.
During Pascal's presentation, she touted the more than $3.2 billion in global box office that the Spider-Man franchise has made as well as Columbia's success in R-rated comedies mostly in the U.S. market. She also boasted about critically acclaimed dramas that traveled well, such as Moneyball and Zero Dark Thirty.
Spending on film has been already been reduced by 50 percent from its peak seven years ago, she said.
She also showed a clip from The Amazing Spider Man 2.
Steve Mosko, president of Sony Pictures Television, kicked off his presentation by saying: "Right now, we are in the golden age of television, and the possibilities are limitless. He said the firm is scaling up its TV business significantly.
Breaking Bad is now expected to bring in 10 times what the company forecast it would make, executives also said Thursday. Spin-off Better Call Saul will be profitable from day one, they said.
During the question-and-answer period, Lynton was asked to further explain the company's decision to go from 23 movies to 18 per year.
"I want to stress right now that we in no way, shape or form lost our commitment to the movie business," Lynton said.
"Part of it is, how many movies can a marketing department actually handle in a quality way in a given year? When you think about it, 18 is almost one-and-a-half a month, which is a lot," he said.
"The other thing to think about is -- you've seen the pileup going on over the summertime, and there will be a similar pileup I expect over Christmastime. There are only so many weekends that are viable to release a picture," he said. "I know they say there are 52 weekends in a year. I'm frequently reminded that probably 40 of those really matter."
Lynton also reiterated plans to further exploit Spider-Man, as it owns the film rights to that supheroe's universe even since Disney purchased Marvel four years ago.
"We do very much have the ambition about creating a bigger universe around Spider-Man. There are a number of scripts in the works," Lynton said. He also said Sony works closely with Disney and Marvel on Spider-Man, presumably not because a joint-venture movie project is in the works but because those entities control merchandising rights to Spider-Man.