5 of 6 Studios Post Profit Declines in 2012
New Novel Offers Glimpses of Superheroes' 'Extreme' Sex Lives
A version of this story first appeared in the March 1 issue of The Hollywood Reporter magazine.
Big international box office, Netflix licensing deals and growing TV production arms helped the filmed entertainment divisions of the six big Hollywood conglomerates post more than $3.5 billion in operating profits in 2012. But that was no match for the year before.
Theatrical performance was mixed -- as always. And while home entertainment stopped declining, it didn’t provide a big boost. Overall, the studio units of all sector biggies except for Comcast's NBCUniversal recorded profit declines for 2012.
Mini-major Lionsgate had "huge profit improvement" and might have eaten into the box office of others, Wunderlich Securities analyst Matthew Harrigan argues. "A couple of the top five film spots that ordinarily go to majors went to Hunger Games and Twilight," he says.PHOTOS: 10 Pre-'Hunger Games' Top Grossing International Film Franchises
Helped by their big TV production arms, Time Warner and News Corp. again led the charge in terms of film unit profitability last year.
The Hollywood Reporter's annual look at studio profits for the latest calendar year follows the release of financials for the fourth quarter. Figures aren't always directly comparable. After all, some companies have fiscal years that differ from the calendar year, and Time Warner, News Corp. and Sony include big TV production businesses, while the other companies don't.
The annual figures nonetheless provide insight into how 2012 played out for the major studios. Here is a look at each company:
Adjusted film unit operating profit: $1.24 billion, down 3.3 percent from $1.28 billion in 2011
As expected, a record result in 2011 and the end of the lucrative Harry Potter franchise that year were tough acts to follow.
Still, Time Warner reported its second-most profitable year ever in the filmed entertainment business -- and it was more than 10 percent higher than in any other year in its history other than 2011. The unit's adjusted operating profit came in at $1.237 billion, just slightly below the year-ago record. The success of The Dark Knight Rises, which grossed $1.1 billion at the global box office, and early business for the first The Hobbit installment helped the performance.PHOTOS: The Making of 'The Dark Knight Rises'
The company said that the film unit benefited from a shift toward higher-margin TV revenue, thanks to the strong performance of its TV studio, and a decline in P&A spending due to fewer theatrical releases.
All this meant that, just like in 2011, TW reported the highest film unit profit out of all Hollywood conglomerates.
Its film figures also include video games and Warner Bros. Television, whose hits include The Big Bang Theory. WBTV accounted for about 60 percent of Warners' 2012 profits. The TV studio posted financial growth despite what TW CFO John Martin called an "extremely challenging comparison against the syndication of The Big Bang Theory and Friends in 2011." He explained, "It was able to overcome those comparisons partially due to growth in demand from subscription VOD services [which brought in around $350 million in revenue in 2012] and international syndication."
How will 2013 shape up? "It's hard to top that, but our 2013 theatrical slate looks even better," TW CEO Jeff Bewkes said in his year-end earnings call. "It includes Man of Steel, The Hangover 3, Great Gatsby, Pacific Rim, the sequel to 300 and, of course, the second film in the Hobbit series."