Studio-by-Studio Profit Report: Disney Reigns, Viacom Stems Losses

Clockwise, from top left: Disney's 'Star Wars: The Last Jedi'; Time Warner's 'Young Sheldon'; Universal's 'The Fate of the Furious'; Fox's 'Logan'; Sony's 'The Crown'; Viacom's 'Transformers: The Last Knight'

Paramount in the black? Not yet, according to THR’s annual film and TV analysis, which reveals a steep slide at Fox, plenty of hits (and misses) at Warners and growth for only half of Hollywood’s six (soon to be five) majors.

Thanks to healthy cinema attendance abroad and Hollywood’s continued success with key franchises — from Star Wars: The Last Jedi and The Fast and the Furious to DC Comics and Marvel superheroes — two of the six major Hollywood studios saw bigger profits in calendar year 2017.

But three of the six major studios (Disney, Fox and Sony) posted smaller profits last year than they did the year before, according to The Hollywood Reporter's annual look at studio profits.

Figures aren't always directly comparable. After all, some companies have fiscal years that differ from the calendar year, and Time Warner, Fox and Sony include big TV production businesses, while other companies don’t. Here is a closer look at each studio:

Disney: The studio wrapped up its fourth straight year at the top of THR’s profit ranking while falling shy of 2016’s record. Studio chief Alan Horn’s 2017 megahits — led by Star Wars: The Last Jedi ($1.32 billion worldwide), Beauty and the Beast ($1.26 billion) and Guardians of the Galaxy Vol. 2 ($864 million) — at least helped Disney avoid a double-digit percentage drop in profitability like the 18 percent fall suffered at its media networks segment (made up of ABC and cable networks like Disney Channel and ESPN). The sports network has lost about 13 million subscribers in the past six years. Denting studio results were tough comparisons in home entertainment, where Cars 3 in 2017 didn’t measure up to Finding Dory in 2016, for example. But Disney’s bold plan to purchase most of the assets of 21st Century Fox — including the film studio — for $52.4 billion is a more significant development. If the Disney and Fox studios were a  single entity in 2017, its domestic box-office market share would have been 38 percent

Time Warner: While Turner improved only slightly and HBO dominated with 13 percent growth, but Wonder Woman and its $822 million global box office led the way for the studio in 2017. Warner Bros. topped its 2016 full-year film profit record with a 12 percent increase to $1.86 billion, good enough to once again rank behind Disney. The studio posted its best year ever at the global box office, as well, with five films bringing in more than $500 million worldwide, including It ($700 million globally) and Dunkirk ($525 million). Still, Warners had to release 20 films to get $5.1 billion, compared with Disney’s eight for $6.5 billion. Warners’ TV production business showed revenue growth courtesy of new hit Young Sheldon and The Voice as well as some higher licensing fees for library titles. Time Warner CEO Jeff Bewkes and other top execs are hoping 2018 is their last year as an independent company as they work for regulatory approval of AT&T’s $85.4 billion acquisition of the media giant.

Universal: After a tough earnings comparison in 2016, the film studio posted record profit in 2017, rising a whopping 84 percent to outperform its 2015 high of $1.23 billion. The performance was driven by “higher theatrical, content licensing, other and home entertainment revenue,” the company said, partially offset by increased programming and production costs. Hits included The Fate of the Furious, which grossed $1.2 billion worldwide, Despicable Me 3 ($1 billion) and the low-budget, Oscar-nominated Get Out ($255 million). TV is not included in NBCU’s filmed entertainment unit, and Comcast CEO Brian Roberts expects lower film profit in 2018 despite a potential blockbuster in the Jurassic World sequel and a solid haul for Fifty Shades Freed. NBCU CEO Steve Burke said DreamWorks Animation, acquired in 2016, will have a “slow year” before its plan to release two pictures a year starting in 2019. “If you combine that with a couple of releases from Illumination, we should have four animated films” that year, he said.

Fox: Logan in 2017 wasn’t quite the match for Deadpool a year earlier, illustrating just one example of tough comparisons, hence studio profit plunged 45 percent year-over-year. Logan’s worldwide box office of $617 million was followed by The Boss Baby (nearly $500 million), then War for the Planet of the Apes ($491 million) and Kingsman: The Golden Circle ($409 million), which did much better abroad than in the U.S. The studio produces TV hits like Empire and This Is Us, and higher VOD results contributed to profitability. Surprisingly, Rupert Murdoch and sons Lachlan and James decided they’d mostly exit the film and TV production business rather than deal with Netflix and other digital threats to the industry, so after it unloads most assets to Disney (pending regulatory approval), what remains will be a TV news and sports powerhouse that will include the Fox News Channel, Fox Business Network, Fox Sports 1 and 2, the Big Ten Network, 28 local TV stations and the Fox broadcast network.

Sony: The studio would have posted a loss for calendar year 2016 had it included a noncash $962 million impairment charge due to revisions to the “future profitability projection for the pictures segment,” mainly because of the weaker home entertainment business. On that basis, Sony returned to profit in 2017. But when excluding that charge from the 2016 figures, its pro­fit for the latest year was off 15 percent. The key theatrical contributors were Spider-Man: Homecoming ($880 million) and Jumanji: Welcome to the Jungle, which has brought in $890 million to date, though much of that will be accounted for on the 2018 ledger. The TV studio scored with such hits as Netflix’s The Crown and AMC’s Better Call Saul. Tony Vinciquerra took over as head of Sony Pictures Entertainment on June 1, and Sony Corp. CFO Kenichiro Yoshida will replace Kaz Hirai as CEO in April. Vinciquerra has been seeking to put his stamp on the operation, and in October he named Hulu CEO Mike Hopkins chairman of Sony Pictures Television.

Viacom: Paramount Pictures suffered its first calendar-year loss since THR started its profit calculations for the year 2009. The overall picture brightened in 2017 as red ink was reduced. CEO Bob Bakish has said that Paramount boss Jim Gianopulos, hired in March 2017, will need time to turn around the studio, and his team’s impact is not expected to be realized until 2019. Paramount relied on foreign audiences last year, with its biggest hit, Transformers: The Last Knight, grossing only $130 million domestically but more than $605 million worldwide. Viacom has said the studio’s TV production business is an area for upside and, while the parent company now seems happy to keep Paramount, Viacom is looking again at a possible merger with CBS Corp. The company also unveiled in November a series of agreements with Hasbro, Skydance Media and Sega, among others, that will provide financing for about 25 percent of the production-slate costs for fiscal years 2018 and 2019.

This story first appeared in the Feb. 21 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.