Profit Up at Sony Music-Film Unit Thanks to Kirch Deal

Despite continuing problems with its theatrical film releases, Sony Corp. reported higher profit in its music and film group in the second quarter--due largely to income from a large foreign film and TV licensing deal.

Separately, Viacom Inc. said its profit fell 22% in the second quarter, marked by lower results in film as well as continuing problems in music retailing. Viacom said its net income dropped to $41.1 million in the quarter from $53 million a year earlier. Sales were up 3% to $2.85 billion.

Despite the release of the hit “Mission: Impossible,” the company’s Paramount Pictures unit was hurt by the disappointing results for “The Phantom.” Paramount’s results were also up against a strong quarter a year earlier, when the company had the international and video release of the hit film “Forrest Gump.” Viacom’s results also show that it is experiencing continuing problems with its Blockbuster Music unit but strong results for its MTV channel.

At Japan-based Sony, operating income for its entertainment business--which includes both music and Sony Pictures--was $156.3 million, up from $115 million a year earlier.

Despite the sluggish box-office performance of its films, Sony’s revenue for the pictures group rose to $977.3 million, from about $680 million a year earlier. The main reason for the boost in Sony’s results was a five-year, $1-billion film and TV licensing agreement with German broadcaster Kirch Group. Also contributing were video sales of “Jumanji,” strength in the television division and the international box office of “Jumanji” and “Sense and Sensibility.”

The results, Sony said, “more than offset the disappointing performance of U.S. theatrical releases during the quarter.” The company is believed to have had only one profitable film in the quarter, “The Craft,” which made a small profit. But the company had several money losers such as “Mrs. Winterbourne” and “Sunset Park.”

Sony has had a string of box-office disappointments this year, the latest being the Michael Keaton comedy “Multiplicity.” Not included in the results is the Jim Carrey comedy “The Cable Guy.” The much-panned film did not live up to its blockbuster expectations, although Sony executives believe it will show a small profit when video and foreign revenue flow in.

On the music side, Sony said revenue was $1.1 billion, down slightly from a year earlier, and operating income dropped because of some delayed releases of music in Japan. (Sony’s revenue figures in dollars were boosted by depreciation of the Japanese yen.)