This morning Sony reported a dismal $1 billion loss for its 2008 fiscal year, but the one bright spot was the conglomerate’s movie division, which was still in the black.
But after Sony Pictures CEO Michael Lynton’s remarks at a panel discussion in New York this morning, you’ve got to figure he’s feeling the pressure, too, since his unit’s operating income dropped by nearly 50% to $305 million. And even though Sony’s studio isn’t flailing and hasn’t suffered the same sort of plunge in profits and piracy that befell 20th Century Fox, Lynton is staring down the barrel of a scary future.
First, he decried the impact of the Internet on the movie business: “I am a guy who hasn’t seen any good come out of the Internet,” Lynton, a former CEO of AOL Europe and president of AOL International, said. “It seems to have done damage to every (part) of the entertainment business.”
Surprising remarks considering how willing Sony has been lately to stream its movies online: it has deals with Hulu, YouTube and makes more titles available on its own video site Crackle. Also many of its releases are covered by Netflix’s streaming pact with Starz, meaning many of Sony’s DVD titles can be viewed online via Netflix.
He also called on Washington to increase protections for copyrighted material, saying “somebody has got to realise that we need some rules.”
While Lynton’s insistence that Washington focus on fighting piracy is a typical statement from a movie exec, it’s not as if Sony just had a movie pirated and downloaded four million times before its release. No, that was 20th Century Fox.
Lynton also bellyached about the state of film financing, describing the inability to raise money due to the ongoing credit crunch as “really a crisis.” Another statement that doesn’t seem to apply to Sony’s own money situation. The studio still has two pacts with Relativity Media to co-finance its upcoming titles, including many summer films. There are other studios, like Disney and Paramount, that don’t have any slate co-financing deals in place.
He did say that the current financing challenges in Hollywood might lead studios to pool their money into one fund and noted that lucrative gross participation deals for actors and directors don’t seem to work anymore.
Does that mean Sony won’t be paying Will Smith and Adam Sandler as much money upfront anymore? Probably not.
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