Significant decreases in profits at the pictures division and financial services led Japanese electronics and entertainment conglomerate Sony to reveal corporate-wide revenues that increased by a third, but net profits that slipped by 17%, for the first quarter of its financial year.
In the April to June period group revenues weighed in at JPY2.23 trillion (up 33% year on year) or $21.6 billion at current rates of exchange. Net income of JPY218 billion (or $1.59 billion) in the latest quarter compared with JPY261 billion ($2.02 billion) in the comparable first period of last year.
The pictures division, which spans feature film, TV production and TV networks, reported revenues of $2.33 billion (compared with $2.64 billion in the same quarter last year) and operating profits of $115 million, compared with profits of $394 million.
The group said that the fall in the pictures division’s revenues reflected reduced deliveries of U.S. TV series and lower licensing revenues, though these were partially offset by higher theatrical revenues. The lower TV sales coupled with higher marketing costs in support of a greater number of theatrical releases were responsible for pushing operating income down so sharply.
Between April and June, Sony released six theatrical films (compared with just two last year) with only “The Pope’s Exorcist” (gross worldwide revenues of $75 million) and “Spider-Man: Across the Spider-Verse” (gross box office of $591 million) making much of an impact.
Films scheduled to be released in the current quarter to September include “Insidious: Inside the Red Door,” “Gran Turismo: Based on a True Story,” “The Equalizer 3” and “Dumb Money.”
For the full financial year, running to March 2024, Sony has reduced its sales forecast for the pictures division by 3%, but kept its guidance for the division’s net profit unchanged at JPY165 billion ($1.20 billion), barely changed from the JPY168 billion actually reported for 2022-23.
At the group’s May strategic presentations, senior management underlined their embrace of the vertical integration model that stretches from electronic components through to film and TV production and avoids operating a generalist streaming platform that would compete with those of the tech giants and Netflix. (Sony’s activities in streaming are limited to Crunchyroll, the specialist anime streaming service that it rolled into its own Funimation platform two years ago, and the PlayStation Network which is an extension of its games console business).
In May, the corporation also said it was placing big bets on India as a large, demographically-favorable entertainment market that is still developing and growing. However, Sony has still not yet been able to close a deal to merge its own Indian broadcast TV operations with those of Zee Entertainment Enterprises, first announced in September 2021 and made formally in December that year.
Regulatory scrutiny of the deal has taken more than 18 months. And concerns about the likelihood of it being completed can only have increased after India’s financial markets regulator in June barred Zee chairman emeritus Subhash Chandra and MD-CEO Punit Goenka from holding office at any listed company. In an interim report, the Securities and Exchange Board made multiple references to the pair “siphoning off funds” and described ZEEL as being used “like a piggy bank” by the two company directors.
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