Films rake in a lot of money. Right? Right. Last year, movies in the U.S. and Canada generated $7.66 billion at the box office, and that doesn't include all of the revenue from the ancillary markets.
But even though the studios are bringing in record amounts of money, the costs of making movies are increasing as well, eating away at the bottom line. The Motion Picture Association of America reports that average production costs for a studio movie in 2000 were close to $54 million, and that figure doesn't take into account marketing costs or stars' salaries, which can go as high as $20-$25 million for A-list box-office draws like Tom Cruise and Julia Roberts.
So in the end, just how much does a studio's revenues contribute to its owner -- conglomerates like AOL Time Warner or Viacom or Walt Disney?
"Somebody told me that Warner film, the studio part, is 5 percent of AOL Time Warner gross," says Bill Mechanic, formerly the studio head at Twentieth Century Fox and now an independent producer. "You know, you could have the biggest movie in the world and it doesn't have that much effect."
The tables below show the revenues that studios help generate for their parent companies. Contrast those numbers with how much operating income the parent companies' business segments are producing. (Operating income is essentially revenues minus expenses, excluding interest and taxes; net income, on the other hand, is what is commonly referred to as the "bottom line.") For instance, Disney's "studio entertainment" -- including Walt Disney Pictures, Touchstone Pictures, and Miramax -- generated almost $6 billion in revenue for Walt Disney Corp. But after the costs are tallied, the operating income for that segment of the business was only $110 million.
Other companies posted much higher operating revenues. Note, however, that the companies' definitions of the business segments that house their studios may also include other operations, such as television studios and theme parks, making it difficult in those cases to isolate the studios' contributions.
Studio Entertainment accounts for 23.6 percent of the revenue that Disney's top
business segments generate, and only 2.7 percent of their operating income.
| Business
Segment
| | Revenue (in millions)
| | Operating
Income (in millions)
| |
| Media
Networks
| | 9615
| | 2298
| |
| Studio
Entertainment*
| | 5944
(23.6%)
| | 110
(2.7%)
| |
| Parks
and Resorts
| | 6803
| | 1620
| |
| Consumer
Products
| | 2622
| | 455
| |
| Internet
Group
| | 368
| | (402)
| |
| Combined
| | 25402
| | 4081
|
*Includes
Walt Disney Pictures, Touchstone Pictures, Walt Disney Feature Animation, Walt
Disney Television Animation, Buena Vista Theatrical Group, Miramax
Source: The Walt Disney Company Annual Report 2000
Filmed Entertainment accounts for 21.7 percent of the revenue that AOL Time
Warner's top business segments generate, and only 9.1 percent of their
operating income*.
| Business
Segment
| | Revenue (in millions)
| | Operating
Income (in millions)
| |
| AOL
| | 7703
| | 2350
| |
| Cable
| | 6054
| | 2831
| |
| Filmed
Entertainment**
| | 8119
(21.7%)
| | 796
(9.1%)
| |
| Networks
| | 6802
| | 1502
| |
| Music
| | 4148
| | 518
| |
| Publishing
| | 4645
| | 747
| |
| Combined
| | 37471
| | 8744
|
* Figures
are pro forma, or projected; estimations for operating income are before
depreciation and amortization.
** Includes Warner Bros. Pictures, New Line Productions, Fine Line Features,
Warner Home Video, Warner Bros. Television
Source: AOL Time Warner Annual Report 2000
Entertainment accounts for 13.5 percent of the revenue that Viacom's top
business segments generate, and 8.9 percent of their operating income.
| Business
Segment
| | Revenue (in millions)
| | Operating
Income (in millions)
| |
| Cable
Networks
| | 3895
| | 1250
| |
| Television
| | 5382
| | 431
| |
| Infinity
| | 2765
| | 589
| |
| Entertainment*
| | 2758
(13.5%)
| | 210
(8.9%)
| |
| Video
| | 4960
| | 76
| |
| Publishing
| | 596
| | 50
| |
| Online
| | 101
| | (257)
| |
| Combined
| | 20457
| | 2349
|
*Includes
Paramount Pictures, Paramount Parks, movie theater and music publishing
operations
Source: Viacom Annual Report 2000
Filmed Entertainment accounts for 27 percent of the sales revenue that News
Corp.'s top business segments generate, and 15.5 percent of their operating
income.
| Business
Segment
| | Revenue (in millions)
| | Operating
Income (in millions)
| |
| Filmed
Entertainment*
| | 6625
(27.0%)
| | 503
(15.5%)
| |
| Television
| | 7008
| | 991
| |
| Cable/Network
Programming
| | 2696
| | 197
| |
| Magazines
and Inserts
| | 1675
| | 437
| |
| Newspapers
| | 4600
| | 904
| |
| Book
Publishing
| | 1907
| | 205
| |
| Combined
| | 24511
| | 3237
|
*Includes
Twentieth Century Fox Film Corp., Fox 2000 Pictures, Fox Searchlight Pictures,
Twentieth Century Fox Home Entertainment
Source: News Corp. Annual Report 2001
Pictures account for 7.7 percent of the sales and operating revenue that Sony's
top business segments generate, and only 1.8 percent of their operating income.
| Business
Segment
| | Revenue (in millions)
| | Operating
Income (in millions)
| |
| Electronics
| | 39989
| | 1989
| |
| Game
| | 5169
| | (409)
| |
| Music
| | 4568
| | 164
| |
| Pictures*
| | 4442
(7.7%)
| | 35
(1.8%)
| |
| Insurance
| | 3415
| | 143
| |
| Combined
| | 57583
| | 1922
|
*Includes
Sony Pictures Entertainment, Sony Pictures Classics, Columbia Pictures,
Columbia TriStar Television
Source: Sony Annual Report 2001
TV/Film accounts for 31.2 percent of the revenue that Vivendi's top business
segments generate, and only 23.6 percent of their operating income*.
| Business
Segment
| | Revenue (in millions)
| | Operating
Income (in millions)
| |
| Music
| | 495
| | 94
| |
| Publishing
| | 3540
| | 493
| |
| TV/Film**
| | 4248
(31.2%)
| | 526
(23.6%)
| |
| Telecoms
| | 5270
| | 1303
| |
| Internet
| | 48
| | (184)
| |
| Combined
| | 13601
| | 2232
|
*Figures
for operating income are before depreciation and amortization.
**Includes Universal Pictures, STUDIOCANAL, Universal Studios Recreation Group,
Canal+, Universal Television & Networks Group
Source: Vivendi Annual Report 2000
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