PolyGram Profit Jump of 21% Reflects Global Strength

Global entertainment giant PolyGram said its net income climbed 21% in 1993 to $316 million, continuing a nine-year string of profit increases that reflect the company’s strong worldwide music sales.

PolyGram’s net income a year earlier was $262 million. Its sales rose 12% to $3.8 billion, from $3.4 billion. The company is 75%-owned by Dutch electronics giant Philips, and 25% is publicly held.

PolyGram, which has rapidly expanded its music and film operations, was helped by two major albums from its A&M; Records unit: Sting’s Grammy-nominated “Ten Summoner’s Tales,” which has sold nearly 5 million copies worldwide, and Bryan Adams’ “So Far So Good,” which has sold about 7 million copies worldwide. Another big seller was U2’s “Zooropa” from PolyGram’s Island Records.

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In an interview, PolyGram Chief Executive Alain Levy also cited the debut releases from the Gin Blossoms and the Cranberries as significant contributors. Results included only a small contribution from Motown Records because PolyGram did not complete its $325-million acquisition of Motown until September.

Contributions by PolyGram’s film units continue to grow, with revenue rising 23% last year. But their contributions to the company’s overall revenue pales in comparison to those from music, where pop sales contributed 69% to revenue.

Levy reiterated previous forecasts that films will account for about 25% of PolyGram’s revenue by the end of the decade.

Last year, PolyGram released 13 films. It expects to increase the total released annually to as many as 15 this year and about 25 by 1996. PolyGram’s Interscope films, which are released through Walt Disney Co., will also be distributed through MGM/UA under another agreement. PolyGram and Universal Pictures also co-own Gramercy Pictures.

Levy said PolyGram’s goal is to set up its own distribution system but said it must first “focus on the quality of what we are producing” before taking that step. He predicted that once that focus is achieved, it will not be difficult to set up a distribution system.

“With the kind of cash flow we have, it would take us five seconds to get into distribution,” he said.