The Little Animated Firm That Could

Entertainment newcomer Pixar Animation Studios announced Tuesday that it capped 1996 by earning $25.3 million on just $38.2 million in revenue, results that came largely on the strength of the hit Walt Disney-distributed film “Toy Story.”

In other entertainment results, strong television results for Sony Pictures Entertainment were partly offset by losses on such feature films as “Multiplicity,” “The Fan” and “The Mirror Has Two Faces.” Separately, operating profit at Rupert Murdoch’s Australia-based News Corp. rose 11% to $5.6 billion, with operating profit up 17% to $576 million for the six months ended Dec. 31.

Pixar’s results, announced Tuesday, show a staggering 66% profit margin and illustrate how much a company can score from a single hit animated film and the products it generates, especially when it is distributed and marketed through a powerhouse such as Disney.

A year earlier, Pixar earned just $1.6 million on revenue of $12.1 million, most of it gained through technology licensing.

Last year, the Richmond, Calif.-based computer animation firm reaped $18.8 million in revenue from “Toy Story.” The company also receives royalties for producing and developing two CD-ROMS based on the film, which totaled more than $3 million in profit for the year. The remainder of Pixar’s revenue and profit comes largely from the licensing of its technology and software.

Jeffrey Logsdon, entertainment analyst with Cruttenden Roth in Irvine, noted that Pixar’s results don’t include any profit from the huge sale of “Toy Story” videos, which will start flowing during the first part of Pixar’s current fiscal year.

Overall, Pixar will receive 10% to 15% of “Toy Story” total profits. Some analysts believe the movie’s total could eventually top $500 million.

Pixar faces the inevitable task of trying to top its first effort amid rising production costs. Pixar’s own success has caused other companies to venture into the computer animation business, driving up salaries.

In an interview, Chairman Steven Jobs said the company has been able to retain and hire top personnel. He added that the company is moving ahead quickly on the animated film “Bugs” for Disney, which he said Pixar hopes to release for the 1998 holidays.

Pixar is known to be working on a third film that Disney will probably distribute, with direct-to-video sequels of “Toy Story” likely as well.

Meanwhile, at Sony, operating income for film and music rose slightly in its fiscal third quarter ended Dec. 31, to $273.3 million from $270.9 million. Revenue at Sony’s movie unit rose to $1.07 billion from $885 million, while revenue in music rose to $1.6 billion from $1.55 billion.

Sony’s entertainment results should improve because they do not include profit from the hit Tom Cruise film “Jerry Maguire,” even though it was released in December.

The company attributed that to a quirk in the alignment of Sony Pictures’ fiscal year and the fiscal year of parent Sony Corp. Sony’s results in the next quarter should receive a substantial boost from the film.

Overall, sources estimated, “Multiplicity” has lost about $25 million, with “The Fan,” whose losses were offset partly by the advance sale of foreign rights, in the red to the tune of about $15 million. “Mirror” is said to have lost from $5 million to $10 million, according to sources.

At News Corp., operating profit at Fox Filmed Entertainment rose 154% partly because of the theatrical and video success of “Independence Day.” The company said the poor performance of two films, “Jingle All the Way” and “The Crucible,” offset some of those gains.

News Corp. said a majority of the stations in its Fox Television Station Group posted gains in revenue and operating profit but that results for the Fox network were lower because of high programming costs and lower prime-time ratings.