Entertainment Industry

Category: Sony

Congress to hold hearings on Universal-EMI merger

Coldplay EMI

Sen. Herb Kohl, chairman of the Judiciary Committee's antitrust panel, is planning to hold hearings on Universal Music Group's proposed merger with EMI Music, a union that would give Universal roughly 40% of the U.S. market for recorded music.

No date has been set, according to Kohl's spokeswoman, Dawn Schueller.

Kohl, a Democrat from Wisconsin, was outspoken against AT&T's proposed $39-billion purchase of T-Mobile last year, a deal that failed after the U.S. Federal Communications Commission said it would oppose the merger. Congressional hearings have no formal sway over antitrust regulators who ultimately have the option of trying to block mergers in court.

Universal, in a statement, responded, "We welcome the opportunity to answer any questions that the subcommittee may have, address the facts and debunk myths. Universal Music is committed to reinvesting in EMI to create even more opportunities for new and established artists, expand the marketplace with more music and support new digital services. We remain confident of regulatory approval."

Its $1.9-billion bid for EMI is currently under review at the U.S. Federal Trade Commission as well as the European Commission. Neither has spoken for or against the proposed transaction.

European regulators earlier this year approved a separate bid by Sony Corp. to purchase EMI's publishing business for $2.2 billion, provided that Sony sold off some of its catalog. 

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Photo: Chris Martin, lead singer of Coldplay, a band signed with EMI Music. Credit: Rafa Rivas / Getty Images.

Sony posts $5.6-billion loss, 10% drop in sales

Sony Kazuo Hirai

Sony Corp. posted a record $5.6-billion annual loss Thursday, ending a fiscal year marred by global economic turmoil and the after-effects of last spring's earthquake and tsunami in Japan and last fall's floods in Thailand.

The consumer electronics and media giant, which is in the midst of a top-to-bottom reorganization, said revenue fell 9.6% to $79.2 billion in its fiscal year ended March 31, down from $87.8 billion last year. Sony lost $5.6 billion, or $5.55 a share, nearly double the prior year's loss of $3.2 billion.

About $3.2 billion of red ink recorded for the fiscal year just ended came from a paper loss it incurred by writing down deferred tax assets. Sony had warned investors in April of the expense hit, as well as the drop in sales.

Much of last year's revenue decline was due to a steep 18.5% drop in the sales of its LCD television sets, digital cameras, personal computers and PlayStation games businesses, which made up close to half of Sony's total revenue.

Its TV and games business suffered from severe competition from lower-cost rivals that forced the company to slash prices. Meanwhile, sales of digital cameras and PCs fell after an October flood in Thailand left factories idle for weeks. The company estimated that it lost sales of $170 million while its facilities were undergoing repairs that cost $160 million.

Sony's movie business blunted the losses in electronics, recording a $416-million operating profit on $8 billion in sales. A 9.6% uptick in revenue for Sony Pictures came from its television business as well as growth in video-on-demand sales and a sale of its share in the royalties from Spider-Man merchandise.

Its music business marked a 6% drop in sales to $5.4 billion from $5.7 billion a year earlier as CD sales continued to erode. Operating profits dipped 5.2% to $450 million, down from $475 million the year before.

Its new chief executive, Kazuo Hirai, has vowed to turn things around, telling investors that "Sony will change." Last month, the company said it would eliminate 10,000 jobs. The announcement followed a corporate realignment that demoted its once-sacred television business. Instead, the company would focus more on games, digital imaging and mobile products.

As a result, Sony forecast that it would grow revenue 14% in the current fiscal year with its factories humming again. It also projected a modest $366-million profit for the year, thanks to aggressive cost-cutting and a greater emphasis on higher-margin products such as medical imaging equipment.

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Photo: Kazuo Hirai, Sony's new chief executive, at the 2012 Consumer Electronics Show in Las Vegas. Credit: Ethan Miller / Getty Images

European Union approves Sony EMI merger

Stevie Wonder

The European Union's antitrust regulators on Thursday approved Sony Corp.'s $2.2-billion acquisition of EMI's publishing business, which would create the world's largest music publishing group with rights to about 2 million songs including some by David Bowie, Stevie Wonder and others.

In exchange for the EU's blessing, Sony agreed to sell off several European-based assets that together would have accounted for less than 5% of the combined company's overall revenue, said several executives close to the discussions who did not want to be named because they were not authorized to speak publicly on the matter.

The merger calls for Sony's music publishing subsidiary, Sony/ATV, to administer the EMI catalog on behalf of a consortium of investors, including the Blackstone Group, the Mubadala Development Co., the estate of Michael Jackson, GSO Capital Partners and veteran music and movie mogul David Geffen. Sony itself would be a minority partner.

Geffen's involvement, his first major investment in an entertainment company since co-founding DreamWorks SKG in 1994 -- after a long and successful career in the music industry -- came in the nick of time last fall as Sony struggled to pull together financing for the deal. When Mubadala pulled back some of its investment in the pool weeks leading up to the final bidding for EMI, Geffen jumped into the breach in late October -- days before Sony's offer was due.

Sony still needs to gain the approval of U.S. antitrust regulators who, like the European Commission, must decide whether the deal restricts competition and hurts consumers. The Federal Trade Commission, which has taken the lead in investigating the EMI sale, has not commented on the matter.

Sony, in a statement, said, it "looks forward to successfully concluding the other regulatory review processes that are underway in other regions."

Martin Bandier, chairman and chief executive of Sony/ATV Music Publishing, said: “Having spent over 17 years of my professional life helping to build EMI Music Publishing, today is not only an important milestone on the path to final approval, but a very special day for me, personally.”

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-- Alex Pham

Photo: Stevie Wonder, whose songs' publishing rights are with EMI, at the Hollywood Bowl in 2011. Credit: Lawrence K. Ho / Los Angeles Times

'Total Recall' debut trailer logs 10.8 million views in 48 hours

TotalRecall
Sony Pictures' debut trailer for "Total Recall" racked up 10.8 million views online in its first 48 hours, demonstrating that a "trailer for the trailer" was effective in building hype.

Last Wednesday, Sony released a 30-second "teaser" that showed several scenes from this summer's remake of "Total Recall" starring Colin Farrell. It encouraged people to "get ready for the world trailer premiere" Sunday.

In addition to its debut on Apple's trailer website in the U.S. and other Web destinations internationally, the "Total Recall" trailer was first shown, in a slightly shorter form, on ABC during Sunday's Boston Celtics-Miami Heat game, where it was seen on TV by an additional 4.5 million people, Sony estimated.

ABC promoted the trailer debut in the lead-up to and during the game.

While not the first to employ a "trailer for a trailer" strategy, Sony received some lambasting from fans on the Internet for hyping a video that is in and of itself hype. "There's something distinctly perverse about trailers for a trailer," said a writer on the site CinemaBlend.com. "I know, I know, I'm part of the problem by rewarding this 'trailer for a trailer' phenomenon with coverage," added the site Filmonic.

But people still clicked through on the trailer in huge numbers. While 10.8 million is not a record -- the most recent "Avengers" trailer, released in late February, was seen 13.7 million times in just its first 24 hours -- it's a huge number that immediately drives widespread awareness of the movie, which is the goal for a first trailer.

In addition, on YouTube, where Sony's official version of the trailer has been seen nearly 2.8 million times, 90% of viewers gave it a "thumbs up" vote, instead of a "thumbs down."

"A trailer is one of the most influential pieces of marketing you can do for a movie, so you want to treat it like an event," said Sony marketing President Marc Weinstock. "You should launch it with every piece of promotional firepower you can."

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Sony Corp. of America executive changes are official

Michael Lynton, Amy Pascal and Howard Stringer
A shift in the top executive ranks of Sony's entertainment operations became official Thursday as studio chief Michael Lynton was named chief executive of Sony Corp. of America, effective June 27.

At the same time, Sony's electronics and video game units, which used to be part of Sony America, now report directly to the company's Japan headquarters. Lynton, who will remain chairman of Sony Pictures Entertainment in Culver City, will also take charge of Sony Music Entertainment and Sony/ATV Music Publishing.

Sony Music CEO Doug Morris and Sony/ATV Chairman Martin Bandier will report to Lynton in his new role.

At Sony America, Lynton replaces Howard Stringer, who is stepping down from his role as CEO of Sony Corp. in Tokyo and handing the reins to Kazuo Hirai on April 1.

The expected change puts all of Sony's entertainment assets under one executive answerable to the Hirai. If Sony wants to sell or spin off its entertainment assets, as has long been rumored, grouping them together could make that process simpler.

Nicole Seligman, previously executive vice president of Sony America, was named president. She will be responsible for operations at the New York headquarters of Sony's U.S. subsidiary. Both she and Lynton will report to Hirai.

In a statement, Hirai said Lynton and Seligman will be "key members of my management team."

Lynton pledged to pursue Sony's long-promised, and largely unfilled, goal of uniting the company's content and technology businesses.

"While the studio and the music companies are doing well, this remains an era of great change and challenge," Lynton said in a statement. "And so I know we will work more closely than ever with Sony's electronics and network businesses to bring the best possible entertainment experiences to people everywhere."

In another executive shuffle at Sony America, Rob Wiesenthal, who was executive vice president and chief financial officer, won't stay on to work with Lynton. He is transitioning to Sony/ATV, where Bandier named him president of international. In his new job, Weisenthal will overee the music publisher's operations outside North America and Britain, advise Bandier on business strategy and help with the integration of EMI Music publishing, which Sony/ATV and a consortium of investors recently agreed to buy.

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Photo: Michael Lynton, Amy Pascal and Howard Stringer in April. Credit: Evan Agostini / Getty Images

Sony shake-up puts Lynton atop all entertainment

MichaelLynton
Sony Pictures Entertainment chairman Michael Lynton will be promoted to chief executive of Sony Corp. of America in a management shuffle that gives him oversight of the entertainment and electronics giant's music businesses, people familiar with the matter but not authorized to speak publicly have confirmed.

The change, expected to be announced shortly, comes amid changes at the top of Sony Corp.'s headquarters in Tokyo, where Kaz Hirai will succeed Howard Stringer as chief executive on April 1. Stringer also had the title that Lynton will assume as head of Sony Corp. of America.

Lynton's ascension signals that he will be Hirai's top lieutenant in the U.S. overseeing all of the company's entertainment businesses, except for video games. That unit, as well as Sony's U.S. electronics operations, will continue to report directly to Tokyo. Hirai started his career in music and spent the past 17 years in top roles at Sony's video game unit.

Lynton will continue to be based at Sony Pictures' Culver City lot, even though Sony Corp. of America is headquartered in New York. He has run the movie and television studio since 2004, alongside co-chairwoman Amy Pascal, after previously working elsewhere in the film, Internet and publishing businesses. He has no experience in music.

Under the new structure, Doug Morris, CEO of Sony Music Entertainment, which sells recorded music to consumers, and Martin Bandier, CEO of the Sony/ATV music publishing division, will report to Lynton.

Nicole Seligman, who is currently executive vice president and general counsel of Sony Corp. of America, will be named president of SCA and run its business operations under Lynton, the people close to the matter confirmed.

Rob Wiesenthal,  SCA's chief financial officer, may transition to a new role at Sony/ATV rather than staying in his current position and working with Lynton.

The corporate changes were first reported by the New York Post and Financial Times.

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Photo: Michael Lynton and wife Jamie. Credit: Stefanie Keenan

Box Office: Navy SEALs take out Perry, Aniston, Seyfried

Act of Valor" dominated the weekend box office, opening to a solid $24.7 million, according to an estimate from distributor Relativity MediaThis post has been updated. See the note below for details.

As Hollywood's A-listers prepare for the Academy Awards on Sunday, it was the Navy SEAL stars of the movie "Act of Valor" who dominated the box office.

The intense action movie opened to a solid $24.7 million, according to an estimate from distributor Relativity Media, proving by far the most popular choice for audiences.

"Good Deeds," the latest movie from writer/director Tyler Perry, opened to $16 million. It's the second-smallest opening ever for the prolific filmmaker and actor, ahead of only 2007's "Daddy's Little Girls."

"Wanderlust," a new Judd Apatow-produced comedy starring Jennifer Aniston and Paul Rudd, and the thriller "Gone" starring Amanda Seyfried were both flops, opening to just $6.6 million and $5 million, respectively.

"Act of Valor," which has won plaudits for its ultra-realistic action sequences that feature the SEAL stars in training exercises, was a big bet for Relativity. The financially struggling independent studio topped other bidders by paying $13.5 million for rights to the movie produced by production company Bandito Brothers. It also committed tens of millions of dollars to an extensive marketing campaign that included four ads in and around the Super Bowl and online material targeting video game players.

But the investment appears to be paying off, as box-office receipts came in at the high end of pre-release expectations. Just as important, audiences loved the film, giving it an average grade of A, according to market research firm CinemaScore. That was not only true for men, who made up 71% of the audiences, but women. Strong word-of-mouth could help "Act of Valor"

Despite the softer-than-usual opening for "Good Deeds," distributor Lionsgate is optimistic the film will ultimately end up close to the average total gross for Perry's movies, about $50 million. The studio's executive vice president of distribution, David Spitz, noted that a higher-than-average Friday-to-Saturday box-office increase of 25%, plus an A CinemaScore, indicate that Perry's mostly female and African American fan base loved the movie.

The same can't be said for "Wanderlust," which had the second-lowest opening ever for a movie produced by comedy guru Apatow, ahead of the 2007 music parody "Walk Hard: The Dewey Cox Story." The film about an uptight Manhattan couple who move to a commune got a CinemaScore of B-. It was financed by Universal Pictures and a fund previously managed by Relativity for around $35 million.

The weak opening for "Gone" marks the second time in a row that a film released by Summit Entertainment has opened behind one from the studio that bought it in January, Lionsgate. Audiences didn't like the low-budget film, for which Summit acquired domestic distribution rights from financier Lakeshore Entertainment, giving it a CinemaScore of just C+ from its mostly female audience.

Also notable at this weekend's box office: The Channing Tatum-Rachel McAdams romantic drama "The Vow" took in $10 million and brought its total gross to more than $100 million, become the first movie released by Sony Pictures' Screen Gems genre label to do so.

The Denzel Washington-Ryan Reynolds thriller "Safe House," which also opened Feb. 10, is right behind at $98.1 million.

[Updated, 11:18 A.M., Feb. 26: It was a third movie that opened that weekend, "Journey 2: The Mysterious Island," which had the strongest performance. With ticket sales down only 32% compared with last weekend, it grossed $13.5 million, slightly more than "Safe House" or "The Vow." Its domestic total is now $76.7 million, while a strong overseas performance has helped it to a worldwide total of more than $235 million.

Liam Neeson thriller "The Grey" has become the first breakout hit from new studio Open Road Films, co-owned by theater chains AMC and Regal, surpassing $50 million this weekend.

Here are the top 10 movies at the domestic office, with international results when available, according to studio estimates:

Continue reading »

Sony's PlayStation Vita: The little console that could?

PlayStation Vita Kazuo Hirai E3Sony Corp.'s freshly launched PlayStation Vita handheld game console could generate more than $2.2 billion in revenue this year for the Japanese consumer electronics and media giant, according to the Boston-based market research firm Strategy Analytics.

The forecast is welcome news for Sony, which is struggling to recover from a catastrophic 2011, when an earthquake hobbled its home market in Japan and floods ravaged its factories in Thailand, and left the company with a $2 billion loss for the quarter ended Dec. 31, 2011.

The $250 device, which hit U.S. stores Wednesday after being released first in Japan Dec. 17, is a litmus test of sorts for Kazuo Hirai, Sony's newly appointed leader. Hirai had championed the device during his time overseeing the PlayStation business as an example of the perfect marriage between hardware and entertainment content. 

As a palm-sized device capable of accessing the Internet, the Vita also represented Sony's broader push toward connected entertainment in a portable package — allowing consumers to summon all manner of digital content on the go, including games, music and videos.

"The real value of the PlayStation Vita is its drive for content revenue growth and its strategic position in Sony’s entertainment ecosystem," wrote Strategy Analytics researcher Jia Wu, who forecast that Sony could sell 12.4 million units of the device and generate $2.2 billion in revenue for Sony in 2012. The estimate assumes that Sony would cut the price of the console sometime this year, bringing the average retail price to $180. The device is also expected to yield an additional $800 million in higher-margin software sales this year.

But the Vita faces headwinds, Wu cautioned. Among them is a cooling of demand for game consoles in general as consumers turn to smartphones and tablets for entertainment.

"Sales of the Wi-Fi version of PlayStation Vita at $249 initially exploded, selling more than 300,000 units in the first week of release" in Japan in December, he noted. "But the new console is barely moving 20,000 units per week in its home market after all the hard-core fans made their purchases."

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Photo: Kazuo Hirai, Sony's next chief executive, introduces the PlayStation Vita during a news conference at the 2011 E3 conference in Los Angeles. Credit: Jonathan Alcorn / Bloomberg.

 

 



 

Relativity, Fortress sued by investor in Sony slate deal

Adam Sandler, Chris Rock and Kevin James in "Grown Ups."

A film company that invested in a Sony Pictures co-financing fund arranged by Relativity Media is suing both Relativity and Wall Street giant Fortress Investment Group for fraud and breach of contract.

The suit, filed Wednesday in Los Angeles Superior Court by Aramid Entertainment Fund, claims the Sony fund, which provided more than $500 million in capital to co-finance movies since 2008, was shut down late last year in a manner that benefited both Fortress and Relativity but deprived Aramid of at least $44 million.

Aramid claims to have invested $22 million in the film-finance fund set up by Relativity, for which financing was arranged by Citi. The so-called "Beverly slate deal" allowed Relativity to choose from among most of Sony's productions to co-finance up to 45 movies over a five-year period. Films it has co-financed included the Adam Sandler comedy "Grown Ups" and the Kevin James comedy "Paul Blart: Mall Cop."

According to the suit, Fortress, an investment firm with more than $43 billion under management, was given access to Aramid's private financial information, including details of the Beverly slate arrangement, in order to consider buying some of the film company's assets. The two firms did not end up making a deal, but Aramid alleges that Fortress improperly used that information to later buy into the Beverly deal.

Late last year, the lawsuit states, Fortress arranged to buy out Citi's interest in the Beverly slate, which was worth $226.7 million, for just $113.5 million, as the bank wanted to exit the movie deal. At the same time, Fortress is alleged to have convinced Sony Pictures to end the deal, which was supposed to allow Beverly to keep funding movies through 2013, in December 2011.

To end the deal early, Sony allegedly paid Beverly no more than $214 million, which the lawsuit claimed saved the studio up to $222 million in payments that would eventually be owed on the co-financed movies.

The arrangement allowed Fortress to make a gross profit of approximately $96.1 million, the suit claims.

In order to convince Relativity, which earned a producer fee of $1 million plus 2% of gross receipts for each co-financed movie, Fortress paid it $14.5 million late last year, the lawsuit claims. While that's allegedly $15 million to $30 million less than Relativity would have ultimately made under the deal, the independent studio, led by outspoken Chief Executive Ryan Kavanaugh, was under financial strain last year. Following several box-office disappointments, its relationship with former backer Elliott Management ended and it took out a loan from Colbeck Capital to continue operations.The lawsuit claims that Relativity had reached "functional insolvency [which] made Kavanaugh and Relativity particularly receptive to overtures from Fortress."

The lawsuit claims that Aramid was cut out and received no return on its original $22-million investment, which would have been worth at least $44 million if the Beverly fund had continued making movies. The suit claims that Relativity represented to Aramid throughout the fall that Beverly would co-finance several upcoming Sony films, including "21 Jump Street" and a new Adam Sandler comedy, "I Hate You Dad." Instead, Relativity was allegedly working with Fortress and Sony to end the Beverly deal early.

A spokesman for Fortress did not respond to a request for comment. Spokesmen for Relativity and Sony declined to comment.

Aramid was previously involved in litigation related to film investments made by financier David Bergstein and construction magnate Ron Tutor.

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— Ben Fritz

Photo: David Spade, Adam Sandler, Chris Rock and Kevin James in "Grown Ups." Credit: Tracey Bennett / Columbia Pictures

Sony posts $2-billion loss, 17% drop in sales

Kazuo Hirai Sony

Battered by a strong yen and floods in Thailand that hobbled several of its factories, Sony Corp. reported a $2-billion loss and a sharp decline in sales for its end-of-year quarter.

The Tokyo technology and entertainment giant Thursday said sales slid 17.4% to $23.4 billion in its third quarter ended Dec. 31. Its $2-billion net loss compared with a $950 million gain the same period a year earlier. 

The bulk of the losses stemmed from Sony's core consumer electronics business, where it was forced to cut the prices of its LCD television sets below production cost to compete with lower-cost rivals. Compounding the problem was a the high yen, which made its products more expensive outside of Japan.

Sony's PlayStation business also contributed to the decline. The unit racked up higher marketing costs in the quarter, with expenses to promote its PlayStation Network online entertainment services, while revenue suffered from a price reduction of its PlayStation 3 game console. 

Kazuo Hirai, Sony's newly appointed chief executive, last year said fixing its LCD television business would be the company's No. 1 priority this year.

Sony's film business exhibited a bright spot in an otherwise gloomy financial picture. Revenue from Sony Pictures Entertainment posted a 7.7% increase in revenue to $2.1 billion, ending the quarter with a $9-million profit. Sony attributed the gains to a higher number of box office releases in the quarter, which helped offset a decline in DVD and other home entertainment revenue.

Sony's music business saw both revenue and operating income decline, but remained profitable -- bolstered by continuing strong sales of Adele's "21" album as well as music from the "Glee" TV show. The group's sales fell 11.7% to $1.6 billion, while profits of $196 million were down 21.7% from a year earlier.

Sony also revised its forecast for its full fiscal year, saying the deteriorating economies in Europe and elsewhere will result in lower demand for its products. Sales for the year ending March 31 is now expected to be $83.1 billion, down 1.5% from its November forecast and down 10% from a year earlier.

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-- Alex Pham

Photo: Kazuo Hirai, Sony's new chief executive, at the 2012 Consumer Electronics Show in Las Vegas. Credit: Ethan Miller / Getty Images

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