Dreaming of a Green Christmas : Sony Has a Lot Riding on Films, Records Over the Holidays

At Sony Corp.--widely criticized for its profligate spending on movies and music--executives will be looking for a little vindication in their stockings this Christmas.

The Japanese electronics giant hopes to dominate the box office and album charts over the holidays with Steven Spielberg’s film “Hook” and Michael Jackson’s record “Dangerous.” Sony also has the high-profile movies “Bugsy,” “My Girl” and “The Prince of Tides” under its tree.

While reports say the costly “Hook” must take in more than $200 million worldwide before it breaks even, a prosperous holiday season could help offset criticism that Sony has mismanaged its movie and music units. Analysts say it could also set the stage for a successful U.S. stock offering, after a stunning rebuff by the Tokyo Stock Exchange of a Sony cash-raising effort earlier this month.

“This is a critical juncture,” said Harold Vogel, an entertainment analyst with Merrill Lynch in New York. “If they don’t get past this in terms of good performance in both records and films, people will increase the intensity of their criticism. . . . It is being closely watched by everyone in the industry.”

The early signs are promising. “Dangerous” has been selling briskly since its Tuesday release, though industry sources say its full potential won’t be known for weeks. By Christmas Day, Sony’s four holiday films will occupy more than a quarter of the country’s 24,000 movie screens.

The pictures face strong competition from other holiday films. Paramount’s “The Addams Family,” Universal’s “Cape Fear” and Disney’s “Beauty and the Beast” are off to impressive starts. Still to come are Paramount’s “Star Trek VI,” 20th Century Fox’s “Grand Canyon” and “For the Boys,” Touchstone’s “Father of the Bride,” MGM’s “Rush” and Warner Bros.’ “JFK.”

But the magnitude of Sony’s presence is so great this holiday season that some analysts and competitors look to it to serve as the locomotive that helps pull the entertainment industry out of its long-running slump.

“A film that does well makes people want to see other films,” said Steven Hill, an entertainment analyst at Sutro & Co. in San Francisco. “The pie expands for a while.”

The same is true for the moribund recording industry, according to Capitol-EMI Music Inc. Chairman Joe Smith.

“We all welcome a mega-hit,” he said. “Mega-hit albums increase foot traffic, and that increases sales. If people are motivated to come in, there’s a pretty good chance they will buy something else.”

Both industries could use a boost.

Film profits tumbled this year as moviegoers turned away from the box office in droves. Music shipments were down 11% during the first half of 1991 because of weak demand, according to the Recording Industry Assn. of America.

“With Jackson there’s a lot at stake, and not just for Sony,” RIAA President Jay Berman said.

On the Sony Pictures Entertainment lot in Culver City, the sense of expectation is palpable. Employees sported “Mac is Back” buttons this week to commemorate last Wednesday’s release of “My Girl,” co-starring Macaulay Culkin of “Home Alone” fame.

Sony Music, meanwhile, has spared no expense promoting “Dangerous,” which cost a record $8 million to $10 million to produce.

In France, for instance, the company rented out the Concorde, loaded it with champagne and circled Paris for 90 minutes to preview the album for music industry executives.

Sony spent $4 million on the music video for the album’s first single, “Black and White.” Subsequent videos will cost millions of dollars more.

The company’s film unit has more than $250 million--marketing costs included--invested in its four holiday releases.

Production costs on “Hook” alone exceeded $80 million, according to knowledgeable sources, though Sony puts the figure at $68 million.

An unprecedented contractual agreement gives 40% of the gross proceeds to the talent.

Sony Pictures Chairman Peter Guber sees the holidays as a chance to build momentum.

Sony already holds the No. 1 position at the box office, with 18.3% of box-office share for the year to date divided between its two studios, Columbia Pictures and TriStar Pictures.

Guber said the holiday releases should ensure that it stays on top.

“We’re confident that we have good-quality pictures,” he said. “If the market is there, they will succeed. If not, we’ll pick up our bags and try again.”

But such massive outlays have also given Sony the reputation for being a good-time Charlie in a period during which the industry is preaching fiscal sobriety.

The company has weathered persistent criticism over spending since it purchased CBS Records for $2 billion in 1988 and Columbia Pictures Entertainment for $3.4 billion in 1989.

Sony, moreover, has suffered from a downturn in electronics sales that has pushed the consumer electronics business into a worldwide slump.

The Tokyo-based company recently reported that it expects a 19% drop in earnings for the fiscal year ending next March.

The unkindest cut of all came last week, when private investors who had purchased large blocks in Sony Music Entertainment, a Japanese subsidiary, were unable to lay off the shares on even a single buyer.

Analysts said the response reflected concerns that Sony’s earnings will continue to drop in coming months.

Sony reportedly needs the cash to offset its massive outlay on entertainment operations; indeed, there has been talk of a $2-billion offering in the United States.

Under the circumstances, Sutro’s Hill said, the importance of the holidays to Sony cannot be understated.

“If (its releases) don’t perform, they really have some problems,” Hill said. “How long are they going to keep putting money in there? They are big enough to absorb the losses. But they also have hardware problems.

“Will filmed entertainment be the engine that they want to drive the company into the future? They may decide to pull back.”

Sony’s Big Gamble Sony Corp.’s movie division is behind four of the biggest films opening this holiday season--’Hook,” “Bugsy,” “The Prince of Tides” and “My Girl.” The Japanese electronics giant’s record unit is responsible for the year’s most expensive and comercially ambitious album--Michael Jackson’s “Dangerous.” The release schedule is as follows: “Hook”--Widely rumored to cost more than $80 million, the Steven Spielberg movie is Hollywood’s most eagerly anticipated holiday film. It comes from Sony’s TriStar Pictures and is set for release on Dec. 11. The story follows a grown-up Peter Pan (Robin Williams) who returns to Never-Never Land to rescue his children from Captain Hook (Dustin Hoffman). “Bugsy”--Directed by Barry Levinson and starring Warren Beatty, it centers on the real-life romance between gangster Bugsy Siegel and Virginia Hill, who inspired him to build the first gambling casino in Las Vegas. TriStar’s “Bugsy” is scheduled for release on Dec. 20. It cost a reported $30 million. “The Prince of Tides”--The movie version of the bestselling novel by Pat Conroy comes to theaters on Christmas Day. Barbra Streisand directed and stars in the Columbia Pictures release, which has a reported budget of $30 million. Streisand plays a psychiatrist who helps Nick Nolte untangle his family’s dark past. “My Girl”--Released on Wednesday by Sony’s Columbia Pictures division, it reportedly cost about $15 million. The movie focuses around the relationship between an 11-year-old girl and her friend, played by “Home Alone’s” Macauley Culkin. “Dangerous”--The album, which cost a record-setting $8 to $10 million* to produce, reached record stores on Tuesday. It is Jackson’s first under a lucrative new deal with Sony. Early estimates are that it sold more than 100,000 copies on its first day, which is a fairly strong showing. Jackson’s last album, 1987’s “Bad,” sold more than 25 million copies. Retailers hope “Dangerous” will draw buyers back into record stores after an especially bad year.

* Cost estimates are from Baseline and Hollywood sources.