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Sony posts $3.1-billion loss; film flop depresses revenue

Red ink for the fiscal year that ended March 31 stems from deferred tax credits.

May 27, 2011|Ben Fritz

Declining home entertainment revenue and the box-office failure of the costly comedy "How Do You Know" drove Sony Pictures' revenue down 8% in the recently ended fiscal year. However, improvements in the studio's television business kept operating income roughly flat.

Mixed news for Sony Pictures came amid other bad news for Japanese parent company Sony Corp., which had to take a huge charge tied to the Japan earthquake in the fiscal year that ended March 31 and will be hurt in its current year by the hacking-induced shutdown of its online networks.

For last fiscal year, Sony reported revenue of $86.5 billion, down slightly from the previous year, and a net loss of $3.1 billion. The loss stemmed from $4.4 billion in tax credits that the company deferred because of losses caused by the devastating earthquake and tsunami in March.

The Japanese electronic giant's Sony Pictures unit in Culver City generated $7.2 billion in revenue for the year and $466 million in operating income. The decline in revenue is in part due to fewer big movies on Sony's slate, with hits like "The Karate Kid" and "Grown Ups" bringing in less money than worldwide blockbusters released in 2009 such as "2012" and "Angels & Demons."

The James L. Brooks-directed romantic comedy "How Do You Know," released in December, was a significant blow to the studio's bottom line. The movie cost $120 million to produce and tens of millions more to market, but grossed just $49 million at the global box office.

Sony Pictures' TV business improved thanks to higher revenue from its international channels and programs it produces that are distributed on cable through syndication to local stations.

The studio didn't specify the percentage decline in its home entertainment revenue, but said it was driven by sluggish sales of older titles from its catalog.

Sony Music revenue dropped 5% to $5.7 billion, attributed to the continuing decline in the CD market as well as a difficult comparison with Michael Jackson releases the previous year. However, cost-cutting led to a slight increase in operating income to $469 million.

Results for Sony's devices and networked products and services units, which include electronics such as televisions and PlayStation video games, both improved.

The PlayStation Network online service and Qriocity digital music service were hacked in April, leading to a month-long shutdown that Sony said cost it $172 million. As a result, the company is expecting a "significant decrease" in operating income for its networked products and services division in the current fiscal year despite improving sales.

Overall, Sony said that revenue for its current year would increase 6.6% to $92.2 billion and that it expected net income of $983 million.

Sony shares fell 44 cents, or 2%, to $27.21.


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