Friday, 22 November 2013

Hollywood Babble On & On #1092: Something's Up At Sony

Sony Entertainment, whose assets include Columbia Pictures and Tri-Star Pictures, is announcing quite a few changes. First Bain Capital was brought in to sort out the media-conglomerate's finances to save $100 million a year, then they announced that they were toning down their movie output and investing more in television.

Then I read this piece and I was shocked, SHOCKED!

If you're too lazy to click that drink I'll fill you in.

In 2001 Sony decided that primetime television wasn't the business for them and dropped out completely. They ended their deals with producers, stopped producing pilots, leaving only a handful of syndicated game shows, and daytime soap operas as their only TV productions.

That was beyond dumb… that was super-dumb.

Scripted television production is the meat and potatoes of the entertainment business.

Remember how it works.

A studio buys an option on a script, and a star, then takes that package to a network. If the network likes that package they'll commission the making of a pilot episode. (Sometimes the studio pays for the pilot, sometimes the network, it all depends on the specific deal)

If the studio sells a show to a network they're put on the money track. The broadcaster pays the studio a license fee for each episode which cover the costs of making those episodes, including the fees for the people involved. In exchange the network keeps all the advertising revenue.

If the show lasts long enough for the reruns to go into syndication, either on local stations, or on cable, the studio then keep ALL of that revenue.

Which means that rerun money is all gravy.

So why did Sony get out of TV in 2001?

Basically they were spending too much on TV deals with actors and comedians, and on pilots that didn't sell.

Remember in the early 2000s all of the major networks shared parent companies with Hollywood studios like Paramount, Universal, Warner Bros., and 20th Century Fox.

Sony was not one of them.

That meant they had to try extra hard just to have their pilots acknowledged, let alone bought, because those same networks were running under the myth of "synergy."

Synergy is a bit of nonsense that was all the rage back then where supposedly smart executives thought that 1 studio could supply all of a network's needs.

One studio can't. Networks need a wider reach, and that requires dealing with multiple suppliers of content.

Anyway, now Sony's television division is bringing in at least half of the company's total revenue. They did this following a smart strategy of filling the gaps the big studios left behind. Namely the cable channels that were screaming for original scripted. They were also frugal, and while they've hit some bumps it's been overall a success.

So why is Sony cutting back on theatrical features?

Because they've been making the same mistakes the TV division were making in the early 2000s.

They made huge money deals with stars and filmmakers who couldn't deliver as consistently as many would like you to believe. Their franchise pictures, like Spider-Man, and Men In Black, have budgets that could buy a 3rd World Country, and margins thinner than fashion model.

Even their smaller feature films cost way too much.

The average budget of Adam Sandler's movies is about $70 million, and this is the company that spent at least $120 million just to make a romantic comedy simply because the director, who hasn't had a big hit in a long time, won some Oscars back in the day.

Now the feature film division could learn from the TV division. I'm thinking that targeting gaps in the feature film market, alternative forms of reaching the audience, and a bit of fiscal responsibility could go a long way.

That's what I think, what do you think?

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