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Are Big Budget Movies Really the Best Investment for Sony?

  +Follow August 5, 2013 8:26AM
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George Loeb owns seven percent of Sony Corp (SNE) and the hedge fund manager has felt that’s given him leeway to weigh in on creative decisions. Following two successive high-profile “flops” by Sony, Loeb started openly criticizing the studio’s choices, and wrote a letter recommending that they spin off their entertainment division to focus more on the electronics side of the business.

In an interview with entertainment news site Deadline, George Clooney made his feelings about hedge fund managers weighing in on the movie business clear– stay out of the creative process.  Clooney said, “What he’s doing is scaring studios and pushing them to make decisions from a place of fear. Why is he buying stock like crazy if he’s so down on things? He’s trying to manipulate the market.”

Clooney wasn't done there. He added, “[Loeb] calls himself an activist investor, and I would call him a carpet bagger, and one who is trying to spread a climate of fear that pushes studios to want to make only tent poles.” According to Clooney, when hedge funds get invovled, movie studios are only interested in making safe bets, often $100+ million blockbusters that don't carry the critically lauded heft of a mid-budget or indie. Clooney singled out critcal darlings Michael Clayton, Out of Sight, Good Night, And Good Luck, The Descendants and O, Brother Where Art Though? (movies Clooney was personally involed in) as being movies that would never get made if investors had more control over the creative process.

On the surface, the differing opinions on Sony's fate - one from a "bean counter," one for a creative - seem to be a battle over money versus art. But are Sony's big budget, safe investment "tentpole" movies really that much more economically sound? That is, of the movies Sony has released this year, regardless of big budget or small, untestedconcept or tent-pole, how did they do from a purely financial return standpoint?

Sony and their subsidiary TriStar have released a total of seven films this year. Here’s a breakdown of them:

Grown Ups 2

Production Cost: $80 million

Box Office $123,350,206 (still in theaters)

Profit/Loss Percentage (so far):  + 54.18 percent

Sequels are usuall a safe bet, and the Adam Sandler/Chris Rock/ Kevin James comedy is no exception. Though critically abhorred, this franchise epitomizes what a risk-averse executive is looking for: bankable stars, sequel, appeals to a young audience. The film could end up doubing its intiial investment by then end of its run, probably somehwre around September 2013.

This is The End

Production Cost: $32 million

Box Office: $107,800,422

Profit/Loss Percentage: +236.8 percent

This Seth Rogen/James Franco ensemble meta-comedy, besides its big name stars, has been a big success for Disney. The original concept movie had a modest budget and low-key advertising campaign. A film like This is The End - wherein fictionalized versions of various celebrities react to the ongoing apocalypse - is a film both the Clooneys and the Loebs could get behind. That is, the film has gotten both good reviews and good returns.

White House Down

Production Cost $150 million

Box Office $116,677,953

Profit/Loss Percentage: -22.3 percent

And sometimes studios take the "safe bet" and fall on their face. This movie, on paper, seem slike a slam dunk: highly bankable stars in Jamie Foxx and Channing Tatum; high concept summer blockbuster; a patriotic movie released on the July 4th weekend. But the risk was built right into the price tag: $150 million is a lot to recoup. And this big budget flick just couldn't overcome that, nor its middling reviews (47 percent on Rotten Tomatoes.)

White House Down is what results when investors and creatives try to compromise, and fail. In short, nobody at the studio is happy when something like this movie comes out.,

After Earth

Production Cost: $130 million

Box Office $242,304,315

Profit/Loss Percentage +86.3 percent

After Earth was one of the two movies cited by Loeb (along with White House Down) as being indicative of Sony's broken movie strategy. And while this Will Smith/Jaden Smith sci-fi flick was a tremendous bomb stateside, only bringing in around $65 million domestic, what people fail to count in is the film was a hit internationally, more than recouping its budget.

Evil Dead

Production Cost: $17 million

Box Office $97,542,952

Profit/Loss Percentage: +473.6 percent

Evil Dead was a safe bet all around: a remake of an established horror franchise, cheap to produce, young target audience. And the film was enormously profitable. Released by Sony imprint TriStar, Evil Dead isn't going to be winning any Academy Awards, but it proved to be a solid investment for the company, and percenta-wise was their most profitable venture.

The Call

Production Cost $13 million

Box Office $51,872,378

Profit/Loss Percentage: +299 percent

TriStar's second release of 2013, the Halle Berry-helmed high concept thriller is, like This is the End, the kind of movie taht keeps both creatives and investors happy. The story is original, the movie was cheap to produce, and while it had no international appeal, it did very repsectably at the box office, ringing in a ver healthy profit.

The Smurfs 2

Production Cost $115 million

Box Office : $80.26 million (still in theaters)

Profit/Loss Percentage: -30 percent

The sequel to the CGI smash The Smurfs has "tentpole" written all over it. Yet after just one week, pundits are already saying the movie is a big disappointment, and will have to (like After Earth) ring in big overseas numbers to recoup. Horrendous word of mouth is likely to sink this kiddie flick in the US: it's only got a 12 percent rating on Rotten Tomatoes.

It seems that, at least for Sony this year, the highest return seems to be original, high concept low-to-mid budget flicks. Of course, this list doesn't include tJames Bond movie Skyfall, Sony's smash tentpole that brought in more revenue than every movie on this list combined - 1.1 billion box office, to be precise.

But for 2013, Sony's biggest hits, percentage-wise, are the orginal non-tenpoles, albeit ones that actually have a healthy return. They're the movies that both creatives and investors love, giving hope that the Loebs and the Clooneys can one day find a middle ground.

Results for SNE
Stock Herald
16 Apr 14 20:45:21
$SNE: [$$] Fantasy Ends for Sony http://t.co/1J4bTSiAMH
stocknews247
16 Apr 14 20:32:17
$SNE - [$$] Fantasy Ends for Sony -> http://t.co/LxRLkj6r46 #stock #stocks #stockaction
TweakTown
16 Apr 14 20:31:36
.@Sony has sold more than 7 million #PlayStation4 units globally (by @CharlesJGantt) $SNE http://t.co/4DgoEErq89
Stock Herald
16 Apr 14 20:01:37
$SNE: The Third Point strategy: Japan macro and US merger arbitration http://t.co/XtQpcDuDMg
Informer
16 Apr 14 19:50:06
$SNE: Sony Struggles to Meet Surging Demand for PlayStation4 http://t.co/oXbmBFiLr2
Informer
16 Apr 14 19:46:05
$SNE: The Third Point strategy: Japan macro and US merger arbitration http://t.co/AebC53g20b
gordon gekko is god
16 Apr 14 19:42:23
PS4 end-user sales top 7M http://t.co/d7AoqYBDcb $SNE
StockNews24
16 Apr 14 19:36:45
$SNE - The Third Point strategy: Japan macro and US merger arbitration -> http://t.co/0MJIEyplJL #stock #stocks #stockaction
Instaya
16 Apr 14 19:32:23
#HeavenIsForRealMovie is here! Experience one family’s journey of truth. Get tickets: http://t.co/lJXB5y32vs http://t.co/3Ck722qxUI $SNE
stocknews247
16 Apr 14 19:32:09
$SNE - Sony Struggles to Meet Surging Demand for PlayStation4 -> http://t.co/z6X8D26WXC #stock #stocks #stockaction
stocknews247
16 Apr 14 19:32:02
$SNE - Sony sells more than 7 million PlayStation 4 consoles -> http://t.co/oTy9k7Ma3p #stock #stocks #stockaction
Instaya
16 Apr 14 19:31:38
RT @attivacapital: 'Heaven Is For Real' Review: A Hit for Skeptics, A Miss for Believers http://t.co/NncWaQSQTO $SNE
Instaya
16 Apr 14 19:31:34
RT @attivacapital: With a $12 million budget, 'Heaven Is For Real' should have no problem turning a profit http://t.co/CHo1irQQ56 via @for…
Adair Corbinea
16 Apr 14 19:13:50
$SNE Sony sells more than 7 million PlayS http://t.co/LG5ADwzOAi
Marc Beauregard
16 Apr 14 18:53:46
More than 7 millions $SNE #PS4 sold in less than 5 months since the launching! That is good news for tomorrow's $AMD earning report!!!
GavinGreenberg
16 Apr 14 18:51:34
$SNE: [$$] Fantasy Comes to End for Sony http://t.co/Jvf3eq52vE
Attiva Capital
16 Apr 14 18:46:13
With a $12 million budget, 'Heaven Is For Real' should have no problem turning a profit http://t.co/CHo1irQQ56 via @forbes $SNE
Attiva Capital
16 Apr 14 18:43:08
'Heaven Is For Real' Review: A Hit for Skeptics, A Miss for Believers http://t.co/NncWaQSQTO $SNE
Attiva Capital
16 Apr 14 18:41:58
Sony sold seven million PS4s already, beating its own predictions http://t.co/QSzGFsbf6T via @engadget $SNE
Aaron Pressman
16 Apr 14 18:32:29
Crickets from the House of Redmond - Sony Says PlayStation 4 Sales Pass Seven Million Units http://t.co/7b0oPkBqUB $SNE $MSFT
stocknews247
16 Apr 14 18:32:17
$SNE - [$$] Fantasy Comes to End for Sony -> http://t.co/wlZC8yYSS7 #stock #stocks #stockaction
Attiva Capital
16 Apr 14 18:25:54
PS4 end-user sales top 7M http://t.co/mbHa7tp5hF … $SNE
Stock Herald
16 Apr 14 17:46:04
$SNE: Sony sells more than 7 million Playstation 4 consoles http://t.co/645hGcTuua
Hedge.Ly
16 Apr 14 17:45:42
$SNE “@BloombergNews: Sony struggles to meet demand for PlayStation4 http://t.co/JvljQegaOL”
garabato
16 Apr 14 17:43:29
RT $SNE @BloombergNews: Sony struggles to meet demand for PlayStation4 http://t.co/RH19wfmtni
stocknews247
16 Apr 14 17:32:31
$SNE - Sony sells more than 7 million Playstation 4 consoles -> http://t.co/bDN8pg1NKw #stock #stocks #stockaction
Stock Herald
16 Apr 14 17:12:38
$SNE: Sony continues to trim the fat, dumps Square-Enix stock http://t.co/UN3KssfT9W
Stock Herald
16 Apr 14 17:12:35
$SNE: Why wage growth in Japan supports Sony and Softbank http://t.co/v94MknxnNk
Stock News 24
16 Apr 14 17:04:32
$SNE - Sony continues to trim the fat, dumps Square-Enix stock -> http://t.co/UhM303NvXa #stock #stocks #stockaction
StockNewsNet
16 Apr 14 17:00:49
$SNE - Why wage growth in Japan supports Sony and Softbank -> http://t.co/adDn5RvPXv #stock #stocks #stockaction
Informer
16 Apr 14 16:55:34
$SNE: Sony Struggles to Meet Demand for PlayStation4 http://t.co/qiMaiR7JzZ
Informer
16 Apr 14 16:49:37
$SNE: Sony Says PlayStation 4 Sales Pass Seven Million Units http://t.co/6q3mpOGLrB
Informer
16 Apr 14 16:49:36
$SNE: URGENT-Sony sells 7 million Playstation consoles http://t.co/WLFTLLbS7X
Informer
16 Apr 14 16:44:06
$SNE: Sony sold seven million PS4s already, beating its own predictions http://t.co/a3Slcf4Si7
Informer
16 Apr 14 16:44:05
$SNE: Sony sells 7 million Playstation consoles http://t.co/flctsnjs1j
MarketNews
16 Apr 14 16:40:01
$SNE - Sony Struggles to Meet Demand for PlayStation4 -> http://t.co/rNdHsvaEWv #stock #stocks #stockaction
SNN Team
16 Apr 14 16:38:29
$SNE - Sony sold seven million PS4s already, beating its own predictions -> http://t.co/hfsiwNSoyX #stock #stocks #stockaction
Stock News 24
16 Apr 14 16:34:37
$SNE - Sony sells 7 million Playstation consoles -> http://t.co/XEVqpoyBQe #stock #stocks #stockaction
Stock News 24
16 Apr 14 16:34:10
$SNE - Sony Says PlayStation 4 Sales Pass Seven Million Units -> http://t.co/iMLcC3QWXz #stock #stocks #stockaction
stocknews247
16 Apr 14 16:32:05
$SNE - Sony sells more than 7 million Playstation 4 consoles -> http://t.co/MeAWaIvrQy #stock #stocks #stockaction
MarketCurrents
16 Apr 14 16:03:53
PS4 end-user sales top 7M http://t.co/cxE1FbzOyx $SNE
Angelo Chirillo
16 Apr 14 14:12:09
$SNE Sony continues to trim the fat, dumps Square-Enix stock http://t.co/aKQt6eFwEZ
Angelo Chirillo
16 Apr 14 14:06:14
$SNE Why wage growth in Japan supports Sony and Softbank http://t.co/Yp7h0bgqEU
Media Sentiment
16 Apr 14 13:07:11
$SNE received a new alert. Find out why at http://t.co/WHJp8eTsSr #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 374
Market Int Center
16 Apr 14 13:02:34
Sony $SNE Showing Bullish Technicals With Support At $18.20 ( http://t.co/adCbuzAQfi )
GavinGreenberg
16 Apr 14 12:13:06
$SNE: Dee Dee Myers to Join Warner Bros. as Head of Communications http://t.co/MBk7p00wo9
stocknews247
16 Apr 14 12:02:32
$SNE - Dee Dee Myers to Join Warner Bros. as Head of Communications -> http://t.co/f5hjaxiyIG #stock #stocks #stockaction
StockNewsNet
16 Apr 14 12:00:08
$SNE - Apples iOS is playing catch up to Android -> http://t.co/WVnAESOVU1 #stock #stocks #stockaction
Stock Herald
16 Apr 14 11:12:36
$SNE: “Guitar Hero” founders going after your voice...
Jeremy Bjoern
16 Apr 14 11:07:34
$SNE: “Guitar Hero” founders going after your voice...
				
				
  +Follow August 5, 2013 8:26AM
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