Seagram Co. in red despite B.O. success

TV, film revs down; theme parks, music up

By MARC GRASER

Despite a string of strong box office performers, Universal still couldn't inch out of the red, contributing to parent Seagram Co.'s first-quarter net loss of $124 million on $3.6 billion in revenues, the company said Thursday.

The loss, however, was narrower than Wall Street had expected for the three-month period ended Sept. 30.

Universal's film division reported an operating loss of $59 million on revenues of $873 million due to several box office flops, including "Mystery Men," "Dudley Do-Right" and "For Love of the Game."

The loss comes despite the blockbuster successes of "The Mummy," "Notting Hill," "American Pie" and "Bowfinger," which collectively generated $209 million during the three-month period. The division generated $75 million in operating profits during the same period a year ago.

Awaiting profit's return

Seagram topper Edgar Bronfman Jr. warned in August that the "film business is in the process of a turnaround" and that a return to profitability would take several quarters.

Despite the film division's loss, Bronfman said Universal Studios beat its single-calendar year record gross of $710 million -- which has stood since 1982, the year "E.T. The Extra-Terrestrial" was released -- in early October with a tally of $711 million in B.O. receipts.

Although not broken out separately, television results reportedly fell as well, due to decreased sales of library product.

Music scores

Seagram's music operations fared much better, with Universal Music Group, the world's largest music company, reporting $1.4 billion in revenues and a 12% increase in cash flow to $185 million thanks to hit albums from Shania Twain, Limp Bizkit and others.

Bronfman said he expects the music group's cash flow to top $1 billion for the full fiscal year as it leads competitors in the U.S., and has strong international market share in countries including France, the U.K., Germany and Brazil.

Theme parks wheeling

The company's theme parks generated $24 million in operating income on revenues of $209 million, up from $14 million in operating income a year ago.

"The results from our recreation business were excellent," Bronfman said. "Universal Studios Islands of Adventure opened to rave reviews. Attendance at our Florida parks is strong and growing. Our Hollywood park showed solid results, in part from the May opening of the Terminator 2: 3D attraction."

Spirits and wine profits rose to $125 million on revenues of $1 billion.

Overall, Seagram said revenues for the quarter rose 62% to $3.64 billion from $2.2 billion a year ago, mainly reflecting the company's acquisition of the Polygram music business.

The figure includes a $55 million gain on the sale of its Universal Concerts operations to the House of Blues.

Not counting a one-time gain from the sale of its concert operations and an accounting charge, Seagram had a loss of $95 million on continuing operations (or 22¢ a share), less than the loss of 32¢ per share expected by analysts surveyed by First Call/Thomson Financial.

Seagram's stock, which rose $4.50 Wednesday after the company said it was moving up its earnings announcement by two weeks, remained at $41.50 at Thursday's close, after trading as high as $43 during the day.