The Variety headline reads, "Paramount films fuel Viacom - (sub-head) Revenues up 21% to $3.9 billion last quarter"
How does one take the trade seriously when they don't offer the real facts, but the spin as a headline?
The real deal from the Paramount/Viacom press release....
Was Paramount the cause of the increase in overall revenues (not net, which is down)? Philippe Dauman leads with something else - "The advantages of our growing multiple revenue streams were evident in the quarter, as we delivered double-digit growth in both our affiliate and ancillary revenues, led by the top-selling Rock Band music
video game."
Then, he gets into the movies.
And what are the actual numbers of the movie side?
In terms of box office, the studio had about $863 million in domestic gross box office dollars compared to $536m in the same quarter last year… a 61% increase.
But the report notes an 84% increase. I assume that reflects a significant increase in international revenues from the three summer movies vs last year’s primary international earner, Shrek The Third… approximately $130m for the quarter.
Paramount produced films, as opposed to DreamWorks produced films, had a much bigger upturn this quarter, which I am surprised was not emphasized. Last year, the quarter was $486 million from DW and $50 million from Paramount proper. This year, it’s $663 million Par and just $200m DW.
But it’s Operating Income that is of greater interest to me. It’s up 291%... but that’s only from $22 million to $86 million.
Disney’s quarterly report for this quarter just came out. (Variety's Headline - "Disney revenue inches forward") Their Operating Income for “Studio Entertainment” (movies) third quarter 2007 (which matches the same months of the year at Paramount’s second quarter) was $192 million compared to Paramount’s 86 million.
What’s really interesting is that Disney’s 3Q 2007 revenues for film were $1.8 billion… the same number as Paramount’s this summer. But the Operating Revenues are more than $100 million better when Disney had that number.
Why?
Indiana Jones barely exists in the quarter because of the studio’s deal with Lucas/Spielberg/Ford. Paramount netted about $50 million on Iron Man in theatrical, so that alone is a big piece of that leap, with marketing staff costs the only out-of-pocket for the studio. Kung Fu Panda is good for another $30 million or so. The entire rest of the schedule represented less than $120 million in worldwide gross and some small amount of Operating Income.
On the other hand, Disney owned their two hits, Pirates 3 and Ratatouille outright.
Also, it seems that Paramount’s percentage of revenues that came from Home Entertainment this last quarter was higher than Disney’s in last year’s summer quarter.
But let’s put last year aside… THIS year, with no Pirates movie which cause Operating Income for Studio Entertainment to drop 49% in this quarter compared to last year, the OI is still $97 million… to Paramount’s $86 million. That’s with about $300 million in total theatrical revenues at Disney versus $863 million at Paramount.
Of course, these numbers include DVD and ancillary sales and apparently, television production, which is stronger at Disney than at Paramount these days. Still…
Scariest for Paramount is anticipating next year’s 3rd Quarter announcement. They are relying on DWA’s Monsters vs Aliens (8% distrib fee only) and Star Trek and a small drama, Case 39 to replace the big revenues of this year’s Iron Man and Kung Fu Panda. The one thing on their side is that they own Star Trek outright, so if the film can escape the series’ atmosphere in which no Star Trek movie has ever grossed over $150m worldwide… well, breakeven is probably around $250 million worldwide (figuring in ancillaries) so the $50 million cleared on Iron Man is at about $350 million worldwide.
I’m not actually angry at Variety or The LA Times for their failure to get into the numbers in a real way, even if the Variety headline is a bit of a scam. The sad part is that I am used to these industry-focused publications offering the surface and not the substance for many years. And it’s kind of sad to watch when they attack each other about whose shallow coverage is less shallow.
Read the complete post at http://www.mcnblogs.com/thehotblog/archives/2008/07/selling_a_param.html