Sony Pictures’ Profit Dropped 86 Percent, but That’s Not as Bad as It Looks

You try competing with a massive "Seinfeld" licensing deal, as well as "Venom" and "Spider-Man" movies in the same damn quarter.
Tom Hardy, "Venom: Let There Be Carnage"
"Venom: Let There Be Carnage"
Sony/Everett Collection

Well, this doesn’t sound good: Sony Pictures profit declined by 86 percent year-over year from its fiscal third quarter of 2022 ending December, versus the same three-month period at the end of calendar 2021. Revenue-wise, the Pictures segment declined by 42 percent.

While Sony’s Pictures segment does not solely count performance at the box office (it also includes home entertainment, television, and streaming), theatrical dropped 89 percent in year-to-year operating income and that bore the brunt of the current decline. Streaming was the sole source of growth.

Those are all giant numbers trending in the wrong direction, but the situation is not quite as ugly as it seems. This past October-to-December period was not a historically successful one for Sony Pictures, but it also faced one hell of a comparison. The very first day of Sony Group’s fiscal Q3 2021, October 1, saw the release of “Venom: Let There Be Carnage,” which did wreak carnage on the box office. “Venom 2” opened to a $90 million (domestic) weekend; all in, the movie captured a half-billion dollars worldwide.

Then fast-forward to December 17, 2021, when “Spider-Man: No Way Home” exploded in theaters. The mighty blockbuster scored a $260 million domestic opening; “No Way Home” eventually tallied a whopping $1.9 billion worldwide. While not all of that would be recognized in Q3, plenty was. (Domestically, the film nabbed $558 million of its eventual $805 million before New Year’s Eve.)

“Spider-Man: No Way Home” would go on to become the third-largest movie, by domestic box-office gross, of all time. Globally, it ranks seventh (and was sixth until “Avatar: The Way of Water” recently passed it).

Sony Pictures also made bank in licensing its classic sitcom “Seinfeld” to Netflix in a deal valued at $500 million; Paramount Global, then called ViacomCBS, got the cable syndication rights. The deal was struck in 2019 but began in fall 2021.

Last, but definitely not least, Sony Pictures sold its GSN Games to Scopely for $1 billion. (That company was under SPE, not gaming.)

SEINFELD, Jason Alexander, Julia Louis-Dreyfus, Jerry Seinfeld, (season 1), 1990-98, (c) Castle Rock Entertainment / Courtsey Everett Collection
“Seinfeld”©Castle Rock Entertainment/Courtesy Everett Collection

So the Christmas 2021 quarter was a wonderful anomaly for Sony Pictures Entertainment, which at the time posted an operating income of nearly 150 billion yen, or $1.314 billion, on $4.06 billion in revenue. This past one was, well, not that. But Sony Pictures still turned an operating profit of $179 million (about 25 billion yen) on $2.35 billion in revenue, led theatrically by “Lyle, Lyle Crocodile.”

All told, Sony stock is currently trading up about 5 percent on Thursday, which means Wall Street liked what it saw — especially in gaming, where soaring revenue increased operating profits by 25 percent.

The good vibes may not last. Sony on Thursday warned that its Pictures fiscal Q4 sales “are expected to be lower than the November forecast primarily due to lower-than-expected revenues… from release date changes for some theatrical releases.” (They’re referring to a few Screen Gems releases, nothing individually major.)

From the smaller screen, TV production delays certainly won’t help. And then there are those pesky foreign-exchange rates; SPE is now cutting marketing costs in an effort to offset lost revenue and maintain its prior operating income forecast.

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