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At Sony, Investor’s Challenge Brings Unwanted Suspense

May 18, 2013 by Leave a Comment

The mood extends beyond the walls of the 44 1/2-acre lot. Each year, Sony rents out the entire Ritz-Carlton Cancún Resort for an international press junket. Day after day, the studio flies in stars and hosts parties.

“What I love about Sony,” said Matthew Tolmach, a former executive at the studio and now a producer based on its lot, “is that they still love movies, and they are incredibly aggressive about making all kinds of them.” He added: “It’s why I want to live there.”

While competitors like Paramount, Disney and even Warner Brothers have gone through ferocious consolidation — all focusing more narrowly on blockbuster-style fantasies and superhero movies — Sony has been slower to give up the industry’s broad prerogatives. Its ambitions still stretch from R-rated romps to “The Amazing Spider-Man” to tiny foreign films to African-American comedies to Oscar-caliber dramas. That requires making a home not just for Mr. Tolmach but also for an extensive family of filmmakers and stars.

Sometimes it pays. Last year, Sony Pictures Entertainment generated about $4.4 billion in global ticket sales, the highest in its history, powered by nine No. 1 hits including “Skyfall,” “Men in Black 3” and “The Vow.” It had an Oscar contender, “Zero Dark Thirty,” started a new franchise, “Hotel Transylvania,” and revived an old one, “21 Jump Street.” It ended the year in first place in market share.

But in true Hollywood style, the Sony picture is not quite what it seems.

The truth is that Sony finds itself at a troubled crossroads. Its go-to stars — Adam Sandler and Will Smith — are now a generation older than the prime film-going audience. And its steep production and infrastructure costs burden Sony with one of Hollywood’s worst profit margins. Sony’s entertainment unit had an operating margin of 6.5 percent in its last fiscal year; the figures at Warner Brothers, Disney, Paramount and 20th Century Fox were all higher.

It is extremely hard to compare studios, analysts warn. Some make only movies, while others, like Sony, also make television shows. Financing arrangements and accounting vary. Sony does not divulge how much of its profit comes from movies and how much comes from its fast-growing television business.

In its last fiscal year, the studio reported operating income of $509 million, up 40 percent from a year before. That result looks fantastic until you consider that roughly 65 percent of the total, analysts estimate, came from a relatively small television arm that includes shows like “Wheel of Fortune” and “Breaking Bad” as well as overseas cable channels. Analysts complain that the giant movie side is holding back profitability.

The movie unit has also lost the man long seen as its protector inside Sony, the far-flung Japanese electronics behemoth. That man is Howard Stringer, who was Sony’s chief executive for seven years. Last year, he turned over the Sony helm to Kazuo Hirai. Mr. Stringer will retire as chairman next month.

But the truly startling plot twist came on Tuesday. Daniel S. Loeb, the activist hedge fund manager known for successfully engineering a shake-up at Yahoo, told Mr. Hirai in a letter that his Third Point investment fund had become Sony’s largest shareholder, with a 6.5 percent stake. With that announcement, Mr. Loeb proposed breathtaking changes at the company, including a spin-off of up to 20 percent of its studio and other entertainment holdings.

Overnight, Michael M. Lynton, the C.E.O. of both Sony Pictures and Sony Entertainment, and Amy Pascal, co-chairwoman of Sony Pictures, found themselves under a kind of weight rarely felt in Hollywood since the 1980s, when corporate raiders and high-yield bond peddlers like Saul Steinberg, the Bass brothers and Michael Milken delved into studios, looking for hidden value.

“The entertainment businesses are important contributors to Sony’s growth and are not for sale,” Sony asserted in response to Mr. Loeb. “We look forward to continuing constructive dialogue with our shareholders as we pursue our strategy.”

A spokeswoman for Mr. Lynton and Ms. Pascal said they had no comment. Several days before the disclosure of Mr. Loeb’s letter — in response to questions about the studio’s performance and its movie release lineup — Steve Elzer, a Sony spokesman, wrote in an e-mail, “We have been strong and steady not just for a year, but for longer than a decade.” He added, “We couldn’t be more confident in our slate this summer and through the year.”

Article source: http://www.nytimes.com/2013/05/19/business/at-sony-investors-challenge-brings-unwanted-suspense.html?partner=rss&emc=rss

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Mattel Gives Max Steel Action Figure New Lease on Life

January 28, 2013 by Leave a Comment

So when Mattel decided to revive its dormant Max Steel line of action figures in the United States, it had a rare opportunity to re-examine the old marketing strategy for the brand. In doing so, it decided this time to shift its focus to multimedia, and let the toys follow.

“We have put focus and discipline around franchise development and content development,” said Tim Kilpin, the senior vice president for global brands at Mattel, the world’s largest toy company based on revenue. Plans for the Max Steel brand include an animated television series, a live-action short movie, an online hub, mobile games, graphic novels and, eventually, toys and other products.

“If there is a new normal, it’s that there is not just one way to reach an audience,” Mr. Kilpin said. “You’ve got to reach them and engage them through all that’s available.”

When Max Steel was introduced in 1999 as a line of boys’ action toys, it found modest success in the United States. But after the terrorist attacks of 2001, it drew scrutiny from its parent.

“There were some themes that we were very concerned about,” Mr. Kilpin said, “so we did not pursue the range of opportunities in the United States.”

Max Steel faded away in this country, but it continued to sell in South America, where it eventually became a blockbuster hit, outselling Mattel’s top lines, Hot Wheels and Barbie. More than a decade later, when Mattel was looking for a new line to start in the United States, it found one in the back of its own closet.

“We stepped back and looked at why it was so successful in Latin America,” Mr. Kilpin said. Mattel found that boys loved the idea of someone who could unlock his potential and become a hero. Mattel tweaked the original concept, making the character Max younger and easier for boys to relate to, and it began to plot a campaign to bring the brand back to the United States.

But times have changed, and children are much more media-wise than they were in the late ’90s. To market the revived brand, Mattel took a page from its Monster High franchise, which was introduced in 2010 as a line of fashion dolls, with an emphasis on multimedia, including young adult novels and a Web site that used videos and games.

Mattel’s focus on multimedia is no surprise, said Sean McGowan, an analyst at Needham Company. “Mattel is a pioneer for creating toys with media property,” he said, citing He-Man and the Masters of the Universe, a boys’ action franchise Mattel started in the 1980s.

Other toy companies have established similar strategies. Hasbro, the No. 2 toy maker, created a production studio in 2009 and worked with Discovery Communications in 2010 to start a cable television channel called the Hub. Last year, the toy maker Jakks Pacific worked with a subsidiary of Dentsu, the Japanese advertising giant, to produce its first animated television series, “Monsuno,” which was supported by a line of toys and other products.

Toy makers are looking for ways to shore up their revenue. Retail toy sales in the United States declined slightly last year, to $16.5 billion from $16.6 billion the year before, according to the NPD Group, a market research company. Mattel is scheduled to report its fourth-quarter earnings on Friday.

Mattel would not reveal the marketing budget for the reintroduction of Max Steel, but Mr. Kilpin said it was “significant.”

“The best way to put perspective around the scale of it is to say it is a major new franchise launch for the company, much like Monster High was,” he said.

Like Monster High, Max Steel will start with a Web site, maxsteel.com, which will begin at the end of February and include games, character biographies and other features. The campaign will include an animated TV series, Mr. Kilpin said, because Max Steel is better suited to episodic television than was Monster High.

In FremantleMedia Enterprises, Mattel found an experienced producer of children’s television entertainment that it said could generate excitement for Max Steel around the globe. The show will have its premiere on March 25 in the United States on the Disney XD channel. Then it will be introduced in more than 100 markets.

The intent of the wide distribution is to create viral marketing on social networks, said Bob Higgins, the executive vice president for children’s and family programming at Fremantle. “Around the world, kids will start hearing about this,” he said. “Kids want to do what their friends do. If they are watching Max Steel, they want to be a part of that party.”

The marketing campaign will also include graphic novels, which help immerse boys deeper into the storytelling, said Elizabeth Kawasaki, senior editorial director at the animé publisher Viz Media.

“There has been always traditional publishing with media tie-in stuff,” she said, but children’s properties once consisted primarily of early reader books and sticker books. “The market has really changed now.”

Other consumer products will follow, including toys that will appear in stores in August. By then, Mattel said it hopes the brand will be embedded in the hearts and minds of boys.

“The first way that they are going to experience the brand is through those storytelling mechanisms,” Mr. Kilpin said. “Marketing ground zero for this franchise will be maxsteel.com.”

“We believe we are experts in play, not just in making toys,” he said. “That’s what our job is today.”

Article source: http://www.nytimes.com/2013/01/28/business/media/mattel-gives-max-steel-action-figure-new-lease-on-life.html?partner=rss&emc=rss

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Tech Show Loses Clout as the Place for Product News

January 9, 2012 by Leave a Comment

The International Consumer Electronics Show, which will open on Tuesday in Las Vegas, is impossible to ignore. It will smother the city’s gigantic convention center with gadgets and those who make and promote them; more than 140,000 people are expected to attend for a frenzy of old-fashioned social networking with other members of the tech set.

But once again, the show is unlikely to be where any blockbuster products of 2012 are introduced. Many of the hottest new gadgets in recent years — including Apple’s iPad and iPhone, Microsoft’s Kinect and Amazon’s Kindle Fire — were first announced at other events, even though C.E.S. remains the world’s biggest consumer technology convention.

This reflects the changing nature of the technology industry — particularly the fact that the most important developments in the electronics business are no longer coming from the makers of television sets and stereos that have been most closely identified with the show since it started in 1967.

And as the industry and its trade show have grown, the need for buzz and branding has become more acute. The most innovative players — like Apple and Amazon — need to stand out from the crowd and so have chosen to introduce their products at smaller, more narrowly defined conferences and company-only events.

In December, the significance of C.E.S. was further called into question when Microsoft said the 2012 show would be its last for exhibiting. Microsoft also said its chief executive, Steven A. Ballmer, after this year would no longer deliver the opening night keynote address for the event, which a Microsoft executive has done 14 times since 1995. And executives at the wireless carriers are not delivering keynote speeches on their own this year, which means they too are unlikely to make big announcements at the show.

“For the larger guys, the show has become less important,” said Phil McKinney, who retired recently as the chief technology officer for the computer division at Hewlett-Packard, which stopped having a booth at the show in 2009. “The challenge for C.E.S. is when you start losing more and more of these anchor-type brands, does it cause a tipping point?”

Gary Shapiro, president of the Consumer Electronics Association, the industry trade group that produces the show, said that he was sorry to see Microsoft’s departure, but that it would have little impact on the popularity of the show.

The group said it was expecting more than 2,700 exhibitors at this week’s event, compared with 2,800 the year before, although it does not have a final number yet because it is still selling space. Attendance for the show last year was more than 149,000, but it’s too soon to tell whether this year will exceed that figure. Some companies that have stopped exhibiting on the floor still hold private meetings at the event because so many people attend it.

In an interview, Mr. Shapiro said exhibitors come and go from the show all the time. He said C.E.S. has no rival in its ability to attract top-tier executives in the tech industry, media, retailers and others from the around the world. “C.E.S. is the dominant show in consumer technology by any measure,” he said.

Mr. Shapiro disputed the idea that companies no longer make major news at the show, though he said the technology industry is so much larger than it once was that it is now in a “continuous news cycle” throughout the year.

“We are very positive about C.E.S.,” said Hiral Gheewala, director of marketing at Intel, a big exhibitor at the show.

There was a time, though, when it seemed that every major gadget had its debut at C.E.S., including the videocassette recorder in 1970, the camcorder in 1981 and the Xbox from Microsoft in 2001. While the show’s sheer scale — its exhibit space is more than 1.7 million square feet — makes it a desirable place to network, it also means news can easily get muffled.

“It’s not the best place for product announcements,” said Sarah Rotman Epps, an analyst at Forrester Research. “You get lost in all the noise.”

Instead, companies like Apple and Amazon tend to hold their own product presentation where they can have a “captive audience all to themselves,” Ms. Rotman Epps said.

Article source: http://feeds.nytimes.com/click.phdo?i=590e731eade98d3f63b13390cfe1ea05

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Harry Potter Helps Time Warner Profit

November 2, 2011 by Leave a Comment

NEW YORK (AP) — A little magic from Harry Potter lifted Time Warner’s third-quarter earnings sharply on Wednesday, as the final movie about the boy wizard’s adventures led to record results at the media conglomerate’s film division.

“Harry Potter and the Deathly Hallows: Part 2” has made $1.3 billion in ticket revenues worldwide since its July debut, and the home video release on Nov. 11 will likely be one of the biggest of the year.

Combined with Time Warner’s syndication of the TV show “Big Bang Theory,” the movie drove Warner Bros. to its strongest quarter ever, said John Martin, Time Warner’s finance chief, in a conference call. Besides Warner Bros., Time Warner owns HBO, CNN, Time and People magazines and a slew of other media properties.

Although the results surpassed Wall Street’s expectations, investors sent Time Warner’s stock down more than 2 percent Wednesday amid a broader market uptick. Equity analyst Tuna Amobi with SP Capital IQ said investors may be concerned that it was Time Warner’s film division, and not its cable networks business, that carried the quarter.

“Any time you have the film studio driving results, it’s not a comfortable trend on Wall Street,” he said. “It’s a volatile business and it can just as much go south the next quarter.”

The success of the “Harry Potter” blockbuster may have already been priced into Time Warner’s stock price. That said, Amobi called the stock’s retreat a buying opportunity and said investors might be overlooking what’s expected to be an “extremely strong” fourth quarter.

Time Warner Inc. posted net income of $822 million, or 78 cents per share in the July-September period, up 57 percent from $522 million, or 46 cents per share, a year earlier. Adjusted earnings were 79 cents per share.

Revenue rose 11 percent to $7.07 billion from $6.38 billion. Time Warner said this was the highest quarterly growth rate since the third quarter of 2007.

Analysts had expected slightly lower adjusted earnings of 75 cents per share on revenue of $6.97 billion, according to FactSet.

CEO Jeff Bewkes called the quarter “terrific” and said the results show that the company’s focus on investing in “great content” and ways to deliver it is paying off. The company lifted its guidance for the full year, though it did not give specific numbers.

Time Warner, which is based in New York, said it expects its full-year adjusted earnings to rise by a percentage in the high-teens from $2.41 per share in 2010. In August, the company said adjusted earnings for the year should grow by “at least low teens.”

Analysts are predicting $2.78 a share, an increase of 15 percent.

Time Warner’s filmed entertainment segment, Warner Bros., accounted for $3.3 billion of the quarter’s revenue — an increase of 19 percent thanks to “Harry Potter” and higher TV license fees.

Time Warner’s networks segment, which includes HBO, CNN, TBS and other channels, saw its revenue grew 7 percent to $3.21 billion, helped by both higher subscription and higher advertising revenue.

Shows that include “Big Bang Theory,” ”Mike Molly” and “Two and a Half Men” did well, the company said, along with the new series “2 Broke Girls” and “Person of Interest.”

Time Inc., the publishing segment that includes magazines from People to Real Simple to Fortune, saw its revenue fall 1 percent to $889 million due to lower subscription and ad revenue.

Though “Deathly Hallows” was the final movie in the Harry Potter series, the company plans to make more money from the boy wizard and friends.

“While this was the last film in the series, the Harry Potter franchise will endure in a variety of ways for a long time,” Bewkes said. As just one example, next spring we’ll opening the Making of Harry Potter attraction at our studio outside London coinciding with the 2012 London Olympics.”

Time Warner’s shares slid 83 cents, or 2.5 percent, to $33.01 in afternoon trading. The stock is still up about 2.6 percent year-to-date, compared with a 2.3 percent decline for the Standard Poor’s 500 index over the same period.

Article source: http://feeds.nytimes.com/click.phdo?i=86608b693545903c382d6aef036e223f

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Hoping for the Next Big Show, TV Ups the Ante

September 26, 2011 by Leave a Comment

This fall the television networks are trying to lure jaded viewers with high-concept, big-budget shows like “Terra Nova,” which has computer-generated dinosaurs trying to kill off human characters, and “The X Factor,” Simon Cowell’s manic sequel to “American Idol.”

To do that, they are spending years on development and marketing, and in some cases releasing trailers for new shows almost a year before they actually appear on TV. “Terra Nova,” which premieres Monday night, took two years to develop, a timeline more typical for the film industry than for television. “The X Factor,” also on Fox, was first promoted last Thanksgiving and was finally introduced last week.

It’s true at other networks too. NBC’s “Smash,” a drama set backstage at a Broadway musical, was first previewed in May, and it will not have its premiere until February.

Clearly, the hunt is on for blockbuster shows, the kind that will, as Kevin Reilly, the president of entertainment for Fox Broadcasting, put it, “get the hooks in deep enough.” That’s why Fox promoted a $5 million prize for “The X Factor” and budgeted $15 million to $20 million for the two-hour pilot episode of “Terra Nova.”

The potential rewards are huge. According to industry estimates, “The X Factor” is charging up to $400,000 per 30-second commercial, an exceptionally high rate. “Idol,” which is nine years old and is the most popular entertainment show on American television, gets about $475,000.

But the risks are also substantial. That point was underscored when “The X Factor” attracted about 12.5 million viewers in its debut — strong by almost any standards, but below the sky-high expectations for the singing competition.

Mr. Reilly said the network’s willingness to swing for the fences this fall was in part an effort to avoid “the malaise of stuff that comes out in a clump” at the start of each new television season. If history is any guide, 70 percent of the shows that pop up this month and next (the new season officially started last Monday) will not survive long enough for a second season. “The viewer just sort of shrugs” each fall, Mr. Reilly said, “and that’s disappointing — and expensive.”

The alternative might be more expensive — the judges on “The X Factor” command eight-figure salaries and the dinosaurs on “Terra Nova” don’t come cheap either — but it may improve TV’s batting average. Marquee shows tend to be nurtured more carefully and promoted more aggressively, improving the odds that viewers will tune in at least once. The shows can be sold more easily overseas and to digital platforms like Netflix, making it easier to recoup the costs of production and turn a profit.

Steve Sternberg, an independent television analyst, said that CBS and NBC were “playing it relatively safe” this season, but that ABC was taking risks with the retro drama “Pan Am,” the fairy tale-inspired “Once Upon a Time,” and the soapy Hamptons-set “Revenge,” “none of which are currently like anything else on broadcast TV.”

When Paul Lee, the president of entertainment for ABC, took over the network’s ailing prime-time schedule last year, he signaled that he wanted to empower the producers of individual shows to experiment.

“Big failures come from that, and you have to be ready to fall on your face,” he told reporters last winter. “But brand-defining television comes from that. I encourage that; we don’t want cookie-cutter television.”

Risk-taking paid off for ABC in 2004 when it introduced “Lost,” the sprawling science-fiction show. But since then, it has spent heavily on shows like the time-bending mystery “Flash Forward” that have not attracted viewers.

A risk-taking attitude was evident in the halls of the Fox network on a recent visit, where marketers were furiously finishing Web ads for “The X Factor,” teasers for “Terra Nova” and billboards for a new sitcom called “New Girl,” which got high ratings in its premiere on Tuesday night.

Article source: http://feeds.nytimes.com/click.phdo?i=f1bea46dfc88610a209e983b5adbcf08

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Business Briefing | Company News: Blockbuster to Introduce Streaming via Dish Network

September 24, 2011 by Leave a Comment

Blockbuster introduced a video streaming service limited to subscribers of the satellite provider Dish Network, a move to better compete against the video rental giant Netflix and to lure customers from rival cable and satellite TV providers. For non-Dish subscribers, the company also plans to introduce an online streaming plan later this year. The announcement came as Netflix has stumbled with an unpopular price increase and other missteps that have sent the company’s shares tumbling 50 percent in two months. Called Blockbuster Movie Pass, the subscription service will start at $10 a month and includes DVD rentals by mail and at the company’s more than 1,500 stores.

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ArtsBeat: Rowling Releases ‘Harry Potter’ Into the Ether on Pottermore

June 23, 2011 by Leave a Comment

J.K. Rowling, left, with Harry Potter fans Simran Sethi, center, and Ivy Aris, both 12, at the launch of the Pottermore.com Web site in London on Thursday.Andy Rain/European Pressphoto AgencyJ. K. Rowling, left, with the “Harry Potter” fans Simran Sethi, center, and Ivy Aris, both 12, in London, where the Pottermore.com Web site started on Thursday.

Harry Potter is coming as an e-book.

J.K. Rowling, the author behind that blockbuster fantasy series, said at a news conference in London on Thursday that a new interactive Web site built around the series will also sell electronic editions of the seven Harry Potter books, previously available only in print and as audio books.

“I wanted to give something back to the fans that have followed Harry so devotedly over the years, and to bring the stories to a new digital generation,” Ms. Rowling said.

The announcement set off an online frenzy worldwide, as fans of the Harry Potter series learned what Ms. Rowling had been teasing out for days. Last week, she revealed a mysterious Web site, Pottermore.com, but she would not describe the project in any detail until Thursday.

Ms. Rowling has retained the digital rights to her books and for years has resisted the creation of e-book editions, despite the potential popularity and profit that would inevitably follow. In the past several years, electronic sales of popular books have exploded, and publishers have rushed to digitize their backlist books.

The Harry Potter e-books will be available beginning in October from the online store at Pottermore.com, a move that allows Ms. Rowling to circumvent the traditional retailing structure of bookselling. Bookstore chains and independents, which heavily promoted the release of Harry Potter books with splashy midnight release parties, will be left out of the e-book sales, but Ms. Rowling’s publishers, Scholastic and Bloomsbury, will receive a share of the revenues. Information on pricing will not be available until closer to the sale date.

The Pottermore site will include additional material that Ms. Rowling had not included in the original books, and the e-book editions are expected to contain illustrations and interactivity, she said on Thursday. “I’ll be sharing additional information that I’ve been hoarding for years about the world of Harry Potter,” Ms. Rowling told reporters in London. “I can be creative in a medium that didn’t exist back in 1990 when I started writing the books.”

While legions of Harry Potter fans could download e-books to complement the hardcover editions they already own, publishers expect that younger readers who did not experience the original frenzy surrounding Harry Potter books could discover them in digital form first. The electronic editions will be compatible with all major e-readers. Ms. Rowling’s publisher in the United States, Scholastic, said it would provide marketing and promotional support to help sell directly to schools and parents. “This will surely inspire more interest in the series and bring a whole new generation of readers to Harry Potter,” Scholastic said in a statement.

The release of the e-books could dampen the rampant piracy of the Harry Potter books, which are among the most pirated on file-sharing sites, a practice that has frustrated Ms. Rowling and her publishers for years.

All seven Harry Potter books smashed sales records, selling 450 million copies worldwide, and were translated into 70 languages. The final film in the franchise, “Harry Potter and the Deathly Hallows Part 2,” is scheduled to open in the U.S. on July 15.

The arrangement Ms. Rowling described on Thursday was unusual by publishing standards, but perhaps only possible for an author with her wealth and clout. Most publishers will not acquire the print rights of a book without the digital rights attached. Ms. Rowling invited fans to submit their e-mail addresses to the Web site, which will host an online challenge allowing the winners to enter the finished Web site early. Sony was a partner in developing and building the Web site.

Article source: http://feeds.nytimes.com/click.phdo?i=8622b614aa85456cb5165d14922e2acc

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