Showing posts with label Sony Picture Entertainment. Show all posts
Showing posts with label Sony Picture Entertainment. Show all posts

Amy Pascal - New First look Deal with Universal

Posted by Jeff Labels: , , ,

Steve Grantz - Getty Images
When Amy Pascal stepped down as Chairperson of Sony Pictures Entertainment she set up a film Studio, Pascal Pictures, and signed a four year agreement that gave SPE first look rights to her films.   As that contract expired Pascal Pictures signed a new contract with rival Universal Studios.    

Amy Pascal and Pascal Pictures are not completely leaving the SPE fold as they will continue to produce and make Marvel Films and TV shows.   

As stated by Tom Rothman, Chairperson SPE, “Everyone at Sony Pictures, myself first among us, loves Amy. We are profoundly grateful for all her immeasurable contributions, both current and past, to our success. And the great news for us is that our partnership will continue for many years to come with her ongoing work on Spider-Man and other key titles. We are very happy for her.”  

For the moment I do not believe this will have any affect on the situation involving the Spider-Man IP rights that are currently controlled by Sony Pictures Entertainment.  However it MAY BE a precursor to the power struggle between an Activist Investor and Sony Corporation on the fate of Sony Entertainment, which includes SPE. 

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Does the success of Avengers: Endgame change the dynamic with Sony and Universal

Posted by Jeff Labels: , , , ,

The short answer is no, or rather not at the moment.

The long answer is complicated.

Sony Corporation looked at selling all or parts of Sony Entertainment for the better part of 18 months, when it became apparent that there were no viable buyers willing to spend what Sony considered an appropriate amount of money for any segment of the business it decided to move on.  
As an aside a little birdie tells me there is still an interested party, but not for the entirety of Sony Picture Entertainment, but with no one willing to step up for the other segments of the business its looking like a non-starter.
Recently activist investor Dan Loeb, with the backing of his hedge fund, has been purchasing stock in Sony Corporation; the parent company to Sony Entertainment.    Dan Loeb is vocal in his plan to divest (sell/spin off) aspects of Sony Corporation to increase shareholder value.   As of April 20th his hedge fund was the largest single shareholder of Sony Corporation at 6%.   Dan Loeb's plan calls for selling Sony Entertainment or spin it off as a new corporation separate from Sony, using the sale of the company (and or stock) to further fund the electronics segment of Sony Corporation.  

Sony Entertainment is made of four distinct subsidiaries, Sony Pictures, Sony Television, Sony Music, and Sony Music Publishing.  There is clearly not a buyer for the Sony Entertainment as a whole, but could Two or three of the subsidiaries be sold and the fourth spun off?

The other aspect of activist investors it puts increased pressure on the individual parts to be profitable, an asset rather than a liability as a whole.   In calendar year 2019 Sony Pictures and Sony Television were profitable, I am not sure about the music side of the house.   There is now pressure on those units to continue to be profitable, they cannot revert back into being a liability.    

Here is a date to remember, Jun 18th 2019, Sony's next general stockholders meeting and vote to confirm the new board of directors, Dan Loeb is not currently a member.    During general stockholder's meetings is when activist investors push their strategy.   If Dan Loeb has enough support that when it will take place.


As indicated in Calendar year 2017 and 2018 Sony Pictures was profitable, even with a number of sub par box office performances, leading the way was Jumanji, Peter Rabbit, Hotel Transylvania 3, The Equalizer 2, as well as the Marvel Titles of Spider-Man Homecoming, Venom, and Into the Spider-verse.   For Sony the problem with the Marvel titles is their profitability in comparison to their cost.   Does Sony invest $200 Million (spread out over 24 months) to make $50 million in net profit in return?   

As I have indicated previously Sony has put all their chips on the table and is waiting for anyone, well at least Marvel Studios (Disney) to do something.   

Avengers: Endgame was the conclusion of Phase 3 (The Infinity Stones) storyline of Marvel Studios, while we have some idea of what comes next (cough Secret Invasion cough probably maybe).   We also know that Avengers: Endgame will be extremely profitable, as it generated 550 million in revenue for Marvel Studios on $500 million dollar total budget in its first seven days of release.   It's likely the film will generate another $500 million dollars profit for Marvel Studios.   

In the end I believe the success of Avengers: Endgame puts more pressure on Sony to act.  Financially I know the bean counters at Sony would tell you it's better to pull out of the deal (not renegotiate) the deal with Marvel Studios but it would be a PR nightmare, potentially sinking one or two movie before recovering.   Is Sony ready for that PR nightmare?

I would not be shocked to hear more rumors that Sony and Marvel are discussing a sale of the Marvel Properties (including Men in Black) during mid to late summer as Dan Loeb's supporters become more agitated.   However until Dan Loeb or another activist investor gets enough shareholder support a sale is not going to happen.

My view is Sony will begrudgingly agree to a new crossover deal with Marvel and Marvel will get more creative control of the live action Spider-Man universe allowing all of the Sony Spider-Man universe characters to be in the shared MCU universe.


Universal Pictures
Universal still has the rights to release movies with the Incredible Hulk and Namor.   Hasn't changed as their agreement doesn't have similar clauses requiring Movies be in active production.   
Universal Pictures is owned by NBCUniversal which is owned by Comcast.   To put it bluntly the CEO of Comcast, Brian Roberts and the CEO of Disney, Dave Iger, don't like each other and have actively competed against one another on numerous fronts over the past decade.

In 2019 Disney sold Comcast their share of Sky Network and NBCUniversal is working with Disney to sell NBCUniversal share of HULU streaming service to Disney.   That is something that a year ago I would not believe to have been possible.    It's like a earthquake along the coast of Africa that everyone has been waiting for.

I am guessing their is an expanded agreement in place allowing the use of not only Hulk and the associated characters in his IP to be used by Disney, but a further agreement for Namor to be used as well.    The real question is Disney writing NBCUniversal a check to take the rights back or is it just an expanded use agreement?

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Sony's all in moment - Sony's Universe of Marvel Characters

Posted by Jeff Labels: , ,

Last week Sony Picture Entertainment announced two dates for unannounced films in their Marvel Universe of Sony Characters; July 10th 2020 and October 2nd, 2020.   Many movie pundits began speculating on which two films would be slotted in those dates; the most common answer to that question is Morbius the Living Vampire on July 10th and the Venom sequel on October 2nd.  Assuming those two films are the correct films we have the who, the what and when, but not the why.   That is really the question I think the pundits should be focusing on.

Last Month I speculated on the future Sony's Universe of Marvel Characters suggesting that while Sony preferred outcome would be to sell the IP back to Marvel for a billion dollars if not more I figured the most like result of this gamble would be for Sony to take back control of Spider-man pulling the character out of Marvel's Cinematic Universe and going it alone.  By publicly announcing these two release dates it clearly shows that Sony is going all in with it plans for the Sony's Universe of Marvel Characters.

In poker going all in means betting all of your remaining chips (money) on a single hand as a gambit either believing you have the best hand or that your opponent will not match your bet allowing you to win the chips already in the pot.

Sony is all in on this gambit and their are two possibilities.  Possibility One: Sony believes that after years of mismanagement at the top and a series of failed tent pole films they finally have a winning formula and want to capitalize on it.   Possibility Two: Sony wants to force Marvel (Disney) to pay the highest possible price it can achieve to purchase the rights to Spider-Man and the rest of the characters under Sony's Universe of Marvel Characters back.

Taking a step back lets look at Sony Picture Entertainment place in the world at the moment.   Sony is exploring the sale of SPE and rumor has it both Paramount Pictures (Viacom) and Amazon (Prime Video) were potential buyers.   Last week both of those potential suitors announced an agreement with one another giving certain rights streaming rights of Paramount projects to Amazon Prime.  Effectively shutting out either as a potential buyer of SPE. 
Who is left to by SPE?   Comcast/Universal and Warner Bros (AT&T)?  How about STX or Eurocorp or Legendary Pictures (Wanda)?
A little more than a year ago Sony valued SPE at $40 Billion USD.   Analysts have suggested that number is slightly inflated and the real value is about $30 Billion USD.   That is a pretty heft amount regardless of whether we go with the Analysts or Sony's valuation.   In essence it leaves Comcast/Universal, Warner Bros (AT&T), Legendary Pictures (Wanda), and Netflix in the running.  I would suspect that while all four might kick the tires none of them are currently interested in buying SPE in whole from Sony.    Comcast/Universal, Warner Bros. (AT&T) and Netflix are looking to expand their digital streaming services and Legendary Pictures (Wanda) just signed an release agreement with Warner Bros.   So it doesn't make sense to these organizations to purchase SPE in whole.

If Sony Pictures Entertainment cannot be sold as a whole; who is interested in their assets? 

  • Quick Pause:   I want to clarify a statement, I don't expect any one to be interested in the totality of SPE at the asking price that either the Analysts or Sony has set.   If Sony were to see SPE for $15 or $20 Billion USD there are several interested parties, but $40 Billion is to high a price.

SPE is made up of the Movie Production Company and the Television Production Company.   On the Movie side of the house they have Columbia Pictures, TriStar Productions, Sony Screen Gems, Sony Classics, Sony Pictures Animation, Imageworks and several other companies.   The TV side is far more convoluted with game shows from Merv Griffin, comedies from Jerry Seinfield, current shows like S.W.A.T. and Good Doctor. 

Starting on TV Side:
Merv Griffen Entertainment.   The Game Shows Jeopardy and Wheel of Fortune.     Worth $1 to $1.5 Billion USD.   Buyer - None.   Okay CBS (Viacom) might be interested, but they have to get their house in order first.

Sony TV Animation.   Um err ahhh No One.   Literally they do Hotel Transylvania the Animated Series which airs on Disney XD,

Sony TV:  Here is Sony's problem.   The catalog of older show (Seinfield, Stargate SG-1, The King of Queens, Fantasy Island, and hundreds more) is valued at $25 to $35 Billion (not that anyone would pay that) out of the 19 shows currently in production you might have heard of the Crown or S.W.A.T. but the rest are niche programs.   One analyst suggested the current programming isn't worth what they spend on it and the catalog of older shows is past its prime.
Netflix current formula is for new content doesn't have value for them, however the IP's that SPE owns is a potential gold mine for a stream service like Netflix.   I Dream of Jeannie, Bewitched, Dennis the Menace, Fantasy Island, Code Red, Hardcastle and McCormick and the list goes on and on.   Netflix would be the logical buyer of this catalog and studio but at the $10 to $15 Billion USD range rather that the $25 to $35 Sony wants.

On the Movie Side:
I could spend paragraphs explaining how little SPE's movie side is worth but I will let Sony's on valuation speak for itself.  Above I mentioned that Sony set the value of the totality of SPE at $40 Billion USD, I than laid out that the TV side is valued between $25 and $35 Billion by Sony themselves.    Simple math ($40 B - $25/$35B) suggests that Sony put the value of Movie Studios and their Studios and IPs at a maximum of $15 B and bottom of $5 B USD.   For comparison purposes Disney just payed $71 B for FOX with a similar catalog of TV suggesting Fox Studios was worth ~$35 B.  See the problem?

This is where Sony's all in gambit with Spider-Man comes into play.   Sony's solution has to be either to separate themselves from Marvel Studios entirely or to sell to Marvel.   There is no middle ground in terms of how this gambit plays out.   You cannot go all in and expect to get half your chips back, you either lose everything or double your chips.

Regardless of Sony's desired end-game we know a critical stage is occurring in the near future.   You don't announce the dates if you are not attempting to put pressure on your one opponent, in this case Disney.  That indicates that either discussions on currently ongoing OR will occur in the very near future, as in before the end of the year, concerning Spider-Man IP Rights. 

By putting these dates on the Calendar it is clear that Sony is attempting to Maximize the value of the IP at least on paper  Which indicates that they want Marvel to buy the IP.   If you put the dates out AFTER you come to an agreement than Sony would be looking to retain the IP.  So the question is more about how much does Sony want for the IP?

Bob Iger, CEO of Disney, recently revealed that Disney was interested in getting back the rights to their IPs they don't fully control.   Well this desire goes beyond Marvel, it seemed to be directed at Universal and Sony for the Marvel Characters.

So it seems that we have a set of Dance Partners.

IF Sony wants to sell the Spider-Man IP back to Marvel what do they want? 
For SPE it isn't just about money, not that the money we are talking about is a bad thing, it is also about having IP's that you can continue to monetize and use to support your other projects.   Up through the release of Jumanji last winter Sony has been plagued by under performing IP's.   From roughly 2003 through 2017 most of SPE Franchise IP movie releases have been duds.  It is not that they all bombed, rather a vast majority of the films greatly underperformed at the Box Office.   For every successful film you had three or four that failed to break even at the box office. 
The real problem is Sony has a distinct lack of Franchise IPs under their control.   Sony currently has between 15 and 25 active franchise IPs in their control and another 50 in the fault.   Compare that to Warner Bros who has 30 active franchise IPs and 100's of franchise IP in the fault.   

When Disney completes the purchase of 20th Century Fox assets it will have even more active and inactive Franchise IPs under its control.   Some are pretty well known others not so well known.   But here is one I am going to throw out there: Flash Gordon, currently under Fox's control.

I totally believe that Sony's all in play is to force Marvel to pay a much higher price for the Movie Rights as well as include some other IPs.

I will leave you with one last thought: today SPE announced that the Harbringer IP from Valiant Comics is in full blown active development. 
Something isn't right here. 

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