Silver Screen Is Sony’s Silver Lining : Entertainment Gain Contrasts With 70% Drop in Net Income; Matsushita Also Down

It was a bad year for Japanese makers of camcorders, headphone stereos and videocassette recorders--but their much-maligned entertainment investments emerged as bright spots.

In Tokyo, Sony Corp. on Thursday reported that its consolidated net income plunged nearly 70% to $312.6 million in the year ended March 31, though sales edged up 1.6% to $34.4 billion for the year.

Meanwhile, rival Matsushita Electric Industrial reported a 71% drop in net income to $331 million, with sales for the Osaka-based industrial giant dropping 5% to $60.8 billion.

Both companies attributed their bleak profit reports to soft electronics sales in Japan and Europe and the strong yen, which made it harder to sell goods outside Japan and lowered the cash value of overseas sales when local currencies were converted to yen.

Sony’s poor performance overall contrasted sharply with the strong year turned in by its film and music businesses, which showed a 7% rise in pretax earnings to $904 million.

The results for Culver City-based Sony Pictures Entertainment--which includes Columbia Pictures, TriStar Pictures and Sony Classics, along with television and video divisions--were especially strong, with revenue rising 24% to $3.1 billion.

Sony Pictures last year captured a 20% share of the U.S. moviegoing market and a slightly higher percentage of the international market, largely because of such huge hits as Columbia’s “A Few Good Men,” “A League of Their Own” and “Bram Stoker’s Dracula,” and Tristar’s “Basic Instinct.”

Sony did not break out Sony Pictures’ earnings. But the figure--before such items as taxes, interest, depreciation and amortization--is believed to be in the neighborhood of $350 million.

In music, Sony revenue rose 12% to $3.85 billion. The company’s roster of artists includes Michael Bolton, Mariah Carey, Michael Jackson and Pearl Jam.

Matsushita said that MCA, its Universal City-based entertainment conglomerate, posted revenue of about $3.6 billion, up slightly from a year earlier before being converted into yen. Operating profit for MCA--which includes Universal Pictures, MCA Music and Universal Studios--contributed 6.2% of the total, or about $223 million.

In a statement, Matsushita said that MCA’s music, entertainment and theme park operations performed well. It also cited contributions from such Universal films as “Fried Green Tomatoes” and “Scent of a Woman.”

Sony has invested about $7.5 billion in Hollywood. It bought Columbia and TriStar in 1989, assuming debt in those deals, and then sunk funds into building the studios. The company--which has been second-guessed continually by critics who contend that it overpaid for its movie properties--is hoping that the performance of its entertainment businesses will begin to blunt the criticism.

“Sony Pictures has a strong vote of confidence from Sony Corp.,” Sony USA Vice Chairman Michael P. Schulhof said in an interview Thursday.

Schulhof noted that Sony’s entertainment business has posted three consecutive years of strong revenue growth. Sony, he added, is pleased with its return--about 12% last year--although it would like to boost the return on investment above 15%.

Sony Pictures Chairman Peter Guber added that the company “has found itself theatrically,” but acknowledged that the studios face some major challenges.

In an interview, Guber said those issues include dealing with rising marketing costs for films and keeping television shows on the air long enough to enhance their value in syndication.

Sun Sets on 1993 Profits for Sony and Matsushita

Continued sluggish consumer spending, a recession in Europe and a strong Japanese yen contributed to a 66% drop in profit for Sony Inc. for the 1993 fiscal year ended March 31. Matsushita Electrical Industrial fared even worse with a 67% drop in operating profit. Sony’s decreased earnings were buffered by a strong performance in its entertainment businesses.

* Fiscal Report Card

Profits for Sony and Matsushita in millions of dollars. Fiscal years end March 31.

* Sony 1988: 294 1989: 549 1990: 655 1991: 829 1992: 903 1993: 313

* Matsushita 1988: 1,303 1989: 1,617 1990: 1,482 1991: 1,836 1992: 999 1993: 331

* NOTE: Dollars have been converted from yen.

* Sony at a Glance * Music Group: Includes artists Michael Bolton, Mariah Carey, Michael Jackson, Sade, Gloria Estefan, Julio Iglesais, Kris Kross and Pearl Jam; labels include Columbia and Epic.

* * Pictures Group: 1992 films included “A Few Good Men,” “A League of Their Own,” “Bram Stoker’s Dracula” from Columbia Pictures; “Basic Instinct” from TriStar Pictures; “Howard’s End” and “Indochine” from Sony Pictures Classics.

* 1993 Sales Sales in billions of dollars Music Group: $3.9 Pictures group: 3.3

* Where Sony’s Sales Are

Nearly one-third of Sony’s global sales are in the United States. U.S.: 30.4% Europe: 26.1% Japan: 25.8% Other: 17.7%

* Source: Sony USA Inc.; Matsushita Electric; Bloomberg Business News Researched by DALLAS M. JACKSON / Los Angeles Times