Sony Pictures Entertainment executives informed investors gathered at the firm's Culver City, California, studio lot on Nov 21st, that it plans to produce fewer films and plans to shift to higher-margin television production and to operating TV channels.
This is due to the fact that Sony is currently trying to win over its investor's support after a letter from Daniel Loeb in May, a hedge fund investor who asked Sony to spin off to investors a portion of its entertainment business and take steps to improve the studio's profitability. With that being said, the studio has identified $250 million in overhead and procurement costs cut that it expects to streamline in the next two to three years, via Sony Entertainment CEO Michael Lynton.
Lynton forecasts that Sony's pictures business (including film and television operations), will have $8.4 billion in revenues in fiscal year 2015, with an operating margin of 7.4 percent. In its music business however, the company expects a revenue of $4.8 billion with a 9.5 percent operating income margin as well.
Studio chief Amy Pascal announced that Sony will cut the number of films next year and will release fewer than 20 films compared to the prior years of 23. It will release four films in summer compared to the previous number of 9 this year.
The company also had an operating loss of $181 million in its fiscal second quarter that ended Sept 30 for its pictures unit (including film and TV production), the company stated on Oct 31st with 'White House Down' as one reason for the loss.
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