Major Studio Business Projections

I wasn’t quite sure where to put this article. I mean, it could be an editorial on the state of Hollywood Big Business, or it could be an It’s Arguable for debate on how things stand, or it could be a Spotlight On describing how things currently stand in Hollywood. Since I couldn’t decide I ended up making two articles out of this one topic. So see the Spotlight On section for information on some of the studios’ chequered pasts and check out the editorial section for my take on business in Hollywood.

Now I know that Hollywood is an industry and that is run so as to make the biggest profit for a small amount of people, but you have to wonder what some of these conglomerates were thinking when they acquired and sold off portions of their empire. For one thing, not all businesses are created equal. Certainly there are a lot of differences between making and selling movies than there are in television than there are in running a theme park or a sports team or a music studio or selling electronics. But somehow they are all lumped under entertainment so they can all be done by one company.

So who are the major players in Hollywood these days? Well first there is Disney, the grandfather of cross-brand synergistic globalization. They own not only the Disney theme parks and movie studios but also a handful of television studios including ABC and ESPN. Of course they have just gotten out of, and at a huge loss, the Angels baseball team and the Mighty Ducks hockey team. They may be the granddaddy of the animated feature but with their traditional animation department gone it remains to be seen if they can stand on their own without Pixar to support them. I don’t really think that Disney is going anywhere but considering the shakeup at the top recently and the missed opportunity with Pixar I think that Disney needs to rethink its business plan. Getting rid of Eisner was only step one and there is still a long way to go.

Then there is Sony. Now here is a strange story. A well known electronics company decides to get into the music and movie business by way of the gaming industry. What they find is that games are wildly lucrative and they are pretty successful at music and movies as well. The problem is that their market share in their electronics area is being eroded away by cheap imports. So for Sony broadening their horizons may lead to a complete change of direction and keep the ship afloat. Right now Sony is flying high but they operate in some very competitive markets so they really have to be on their game to keep all of the balls in the air. I think they should keep concentrating on the high end electronics market and the movie studio and leave the low end consumer electronics to Dell and China.

Warner Brothers is still recovering from the hangover know as the AOL /Time Warner merger. This media giant has sold off its music divisions to shore up business. The company still owns Time magazine, CNN, and the Atlanta Braves thanks to Ted Turners varied interests. One can only hope that as the population becomes more technology savvy that AOLs market share drops as people realize that their online service is cumbersome and irritating. But still the company’s holdings in television and film look to be remaining as part of the company’s core business. This company is still in upheaval from overreaching their boundaries and needs to take a hard look at what divisions to keep and what divisions are dragging them down.

Paramount, on the other hand, seems to be having difficulty defining itself as a conglomerate company. Viacom now owns Paramount as well as CBS, MTV, Showtime, and Blockbuster. The company is currently in negotiations to split itself in two with one portion as the fast growth industries, and the other the old standards. Right now it looks like Paramount Movie Studios makes the cut for growth avenues as does MTV Networks, BET Networks, Showtime Networks, and Simon & Schuster. Not so growth oriented are: CBS, UPN, Infinity Broadcasting, Viacom Outdoor, and the Paramount Television Studio. We’ll have to wait and see if this is a ploy to get executives hefty stock option bonuses or if it is really a sound long term restructuring.

Universal Studios is now owned by media titan Vivendi. This one seems to be on the right track at least since Vivendi has gotten out of the French water utility and waste management where it began to focus on the more palatable entertainment industry. The have divested themselves of the Segrams beverage assets and seem well focused on television and telecommunications in Europe and movies here.

20th Century Fox is another company that seems to be focused on what it does best. Headed by media titan Rupert Murdoch the company has sold the Dodgers and Murdoch has not only ditched most of his Australian publications, he has even become a US citizen to avoid those pesky laws that prohibit foreigners from owning news outlets.

So the net of it is that these companies are in constant change and for most of them making movies is only one of a number of entertainment businesses. It is good to see that some of these companies that picked up movie studios as a hobby are redefining themselves so that their movie studios are at the center of their profit making strategy. Hopefully this extra reliance on the film studios doesn’t translate into more conservative and less risky movie ventures since often times a rogue director with a vision makes the most interesting film.