Disney Dives as Sony Soars, Paramount Rises

THR’s annual analysis shows it was a rebound year for the box office and profits after the big 2020 COVID hit. But higher spending weighed down some majors as they ramped up production and marketing

Squid Game

The streamer ended 2021 with 221.8 million global subscribers but added only 18 million for the year, fewer than half the nearly 37 million recorded in 2020 amid COVID-19 stay-athome orders worldwide. Revenue in 2021 rose only slightly less in percentage terms than the year before, while operating profit growth slowed after a 77 percent spike in 2020. Netflix boosted its spending on content to $17 billion, up from $11.8 billion in 2020, which had seen COVID production delays, and touted such series as Squid Game, The Witcher, Emily in Paris and Money Heist and films including Don’t Look Up and Red Notice as viewership drivers. Up next? More tentpoles. Co-CEO Ted Sarandos said Jan. 20: “The idea [of] big-ticket movies that people really care about premiering and being part of your Netflix subscription is actually taking the value proposition to a new level.”

Godzilla vs. Kong

WarnerMedia’s theatrical, TV content and game licensing business rebounded in what it termed a “partial” pandemic recovery. Revenue grew 23 percent, led by a 30 percent “TV product” gain to $8.03 billion, helped by ramped-up productions for The CW and HBO Max (Gossip Girl, The Sex Lives of College Girls). Theatrical revenue rose 19 percent to $5.24 billion behind hits like Godzilla vs. Kong (global box office of $468 million) and Dune ($400 million) as the number of releases jumped from five to 17. Parent AT&T doesn’t report profits for the business, but deducting disclosed direct costs ($10.7 billion, up 30 percent) from revenue, gross profit advanced 10 percent to $4.3 billion. Commensurate with the recovery, marketing expenses soared 66 percent to $1.47 billion, and film and TV production costs climbed 30 percent to $8.42 billion.

Spider-Man: No Way Home

There was a lot to cheer for at Sony and its Pictures division. Theatrical revenue ballooned 120 percent to $1.1 billion thanks to such hits as SpiderMan: No Way Home and Venom: Let There Be Carnage, which drove the unit to its firstever quarterly profit of more than $1 billion in the wrap-up to 2021. Film-related streaming revenue crossed the $1.2 billion mark, and TV revenue rose 27 percent to $3.7 billion, helped by increased deliveries of programs and Netflix’s licensing deal for Seinfeld, which kicked in at the end of 2021. The segment’s TV channels grew revenue 29 percent to $2.6 billion as advertising rebounded from the pandemic hit in 2020 and Sony acquired anime streamer Crunchyroll. All that outweighed a 38 percent home entertainment revenue drop because of a COVID-driven lack of product and higher film marketing costs.

Sing 2

NBCUniversal reorganized its reporting units, with its new studios segment including not only film but also TV production and distribution operations. Revenue rose 16 percent, driven by a 15 percent content licensing gain of $7.6 billion and a 65 percent theatrical jump to $691 million after the 2020 pandemic hit, helped by the likes of F9: The Fast Saga (which exceeded $725 million at the global box office) and Sing 2 (its $333 million worldwide made it the highest-grossing animated film released last year). Home entertainment and other revenue climbed 3 percent to $1.2 billion. But the unit’s profitability dropped as operating expenses rose 21 percent to $8.6 billion, driven by a 26 percent increase in programming and production expenses to $6.8 billion after COVID interruptions in 2020 and a 24 percent increase in marketing expenses to $1.08 billion “due to a higher number of theatrical releases.”

Black Widow

After a reorganization for the streaming age, analysts see the “content sales/licensing and other” business for the Disney Media and Entertainment Distribution division as the closest equivalent to its former studio unit. It includes “the sale of film and episodic television content in the TV/SVOD and home entertainment markets, distribution of films in the theatrical market,” licensing of music rights and the stage business. (Disney+ subscriptions are not part of this.) 2021 operating profit here fell to $281 million on higher expenses, especially for theatrical marketing. Revenue dropped 8 percent, even though theatrical rebounded 87.3 percent despite key titles, such as Black Widow, going day-anddate to Disney+. The company’s top theatrical performer was ShangChi and the Legend of the Ten RIngs ($432 million globally).

A Quiet Place Part II

In 2020, the first year after the Viacom-CBS merger, the conglomerate’s studio unit more than doubled its profit. Last year, it stayed on its growth path, driven by revenue jumping 20 percent and expenses dropping 15 percent to $2.7 billion. Theatrical revenue hit only $241 million, but that was up 34 percent thanks to the pandemic recovery. A Quiet Place Part II was its biggest performer ($297 million so far), followed by PAW Patrol: The Movie ($144 million). Licensing and other revenue rose 19 percent to $2.83 billion thanks to deals with its own streamer, Paramount+, and third parties, plus the licensing of titles from Miramax, in which it acquired a controlling stake in 2020. On Feb. 15, the firm unveiled a rebrand that took the name of its historic studio. “We are pioneers of an exciting new future, focused on streaming,” said CEO Bob Bakish.

Source: Earnings reports and SEC filings. Most companies report operating profit, but Paramount reports adjusted operating income before depreciation and amortization, and NBCUniversal reports adjusted earnings before interest, taxes, depreciation and amortization. WarnerMedia doesn’t break out earnings for its relevant segment, so THR deducted disclosed direct costs from reported revenue. Profit and revenue figures in the billions are rounded and focus on the calendar year 2021 compared with 2020, even though Disney and Sony use different fiscal years.