Sony Survives ‘Last Action’ Flop : Earnings: ‘Sleepless in Seattle,’ ‘In the Line of Fire’ help offset poor results of Schwarzenegger film.

Despite its wager on the box office flop “Last Action Hero,” Sony Pictures Entertainment appears to have recovered with such hits as “Sleepless in Seattle,” “In the Line of Fire” and a record performance from its Loews theater group, financial results released Thursday indicate.

In a separate Sony development, sources close to the company confirmed that it has held discussions recently about a possible investment in the Los Angeles Kings hockey team and help with financing a new arena that Kings owner Bruce McNall wants to build.

Sony declined to comment. The Kings have acknowledged that they are considering taking on minority partners, but they have not identified any group by name. Sources said Sony is considering a deal but has not made any decision yet.

Sony’s financial results--always somewhat cryptic because of the limited information the Japanese company releases about its studio and music operations--show revenue for its Sony Pictures group fell 3.7% to $795.9 million in the three months ended Sept. 30, compared to the year-ago period. Revenue fell 13.3% in the six months, to $1.4 billion.

But the company said all of the decline was due to the recent 18% rise in the value of the yen. Sony Corp. of America President Michael P. Schulhof said in an interview that revenue in local currency--Sony’s sales in the United States before the money is converted into yen--for the film group actually climbed 22% in the quarter.

Sony’s music business, boosted by sales of recordings by such artists as Pearl Jam, Mariah Carey and Barbra Streisand, continued its strong performance. Its three-month sales rose 5.6% to $1.1 billion despite the strong yen. Schulhof said the music group’s revenue would have climbed 30% in the period had it not been for the yen.

“Our software business (films, television and music) is having its best year ever,” he said.

Profit for Sony’s film group--which includes Columbia Pictures, Tristar Pictures, its television operation and its Loews Theater chain--is harder to figure because Sony doesn’t break its numbers out.

Earnings before interest, taxes, depreciation and amortization for its music and pictures business combined fell 15.4% to $189.6 million in the quarter and dropped 27% in the six months to $330.1 million, which the company again blamed chiefly on the strong yen. Sources said the film group probably showed a small drop in pretax earnings in the quarter because the year-earlier period was strong, with music probably showing a slight increase.

The results for the film group were hurt by “Last Action Hero,” the much-hyped Arnold Schwarzenegger film that flopped at the box office. Various sources estimate the film may lose $15 million to $20 million, an amount that could shrink some if the picture performs well in video and in foreign markets. Schulhof did say that the other hit films from Columbia and Tristar more than made up for “Last Action Hero.”

Sony’s entertainment area continues to outshine its parent company’s consumer electronics business worldwide, which has been pummeled by a global electronics slowdown. For the three months ended Sept. 30, Sony’s net income dropped 23.7% to $21.7 million, with operating income falling 57.8% to $116 million. Sales fell 8.7% to $8.9 billion.

Times staff writer Lisa Dillman contributed to this report.