Company Town : Profit for Sony Entertainment Units Jumps 58%

Sony Corp.’s entertainment units posted an increase in operating profit and revenue for the third quarter ended Dec. 31, despite poor box-office results from the film “Money Train” and music sales that have been softer than expected.

The company benefited from sales of the hit sitcom “Seinfeld” into syndication and from strong performances by TV shows such as “Wheel of Fortune” and “Ricki Lake.” In addition, foreign box-office results for such films as “The Net” and “Desperado” gave the company a boost. Another contributor was a reduction of more than 10% in annual overhead, which a Bear, Stearns & Co. report estimated at $100 million.

Despite the profit news, Sony’s American depositary receipts fell $1 a share in trading to $61.625. That happened after Sony executives in Japan said that overall company results for the fiscal year ending March 31 will be lower than previously forecast because of softer computer equipment sales in the U.S. and lower-than-expected results from music.

Third-quarter operating income for Sony’s entertainment segment, which includes music, film and television, totaled $271 million, up 58% from $176 million for the same period a year earlier. Sony’s overall operating income was $1.07 billion, up 55.6%, and its net income rose 47% to $360.6 million.

Industry sources estimate that about two-thirds of the $271-million entertainment operating profit came from Sony’s music division and that a third came from its Sony Pictures unit, which includes film and TV.

The results mark a turnaround for Sony Pictures, which a year earlier had posted a small operating loss.

Music results were lower than expected, in part because Sony had fewer releases than had been hoped for. But one, Mariah Carey’s “Daydream,” has been a major hit and is expected to boost the company’s results for the current quarter.

Entertainment revenue for the period was $2.4 billion, including $1.6 billion for music--up about 1% from a year earlier--and $885 million for Sony Pictures, up 19.4%.

Analysts have been more bullish about the company’s results, which were hammered more than a year ago by a $2.7-billion write-off on its movie unit. The Bear Stearns report, published last week, credits efforts to turn around the pictures unit in a section called “Back From the Abyss.” But the report cautions that the entertainment industry remains extremely competitive.