Nearly a year after Sony Pictures and the PlayStation Network faced targeted hacking attacks, it has emerged that Sony Music had its own breach in the US in 2011. Two British men appeared in a UK court on Friday over charges they illegally downloaded more than 50,000 Sony Music files – most of them by the late Michael Jackson. The duo was arrested last May, just a month after Sony faced a massive breach to its PlayStation Network and a month before website Lulz Security claimed it had broken into SonyPictures.com. The alleged British hackers are said to have stolen the Jackson music, including many unreleased songs, and works by other artists. In 2010, Sony and the Jackson estate signed the biggest recording deal in history giving the company the rights to sell the singer’s entire back catalog along with previously unreleased tracks. Sony is said to have realized the songs had been compromised during routine monitoring of Jackson fansites and hacking forums. The Britsh men have denied the allegations and are due to stand trial next January.
Apple made a major improvement to its digital music service today as it introduced iTunes Match. For $24.99 a year, iTunes will scan a user’s mobile gadget or hard drive, identify its recordings — including those copied from a …
Based on the company’s generally disappointing financial report this morning, it looks like Sony CEO Howard Stringer will have to keep waiting to see a big payoff from the strategy to meld entertainment hardware and software. For the quarter that ended in March, Sony says the industrywide decline in DVD revenues and the lousy results for its Jim Brooks film How Do You Know partly accounted for the 11% drop in movie and TV sales, which came in at $2.1 billion. But operating profits at the segment were up 8%, to $433 million, due largely to belt tightening and a one-time $325 million gain from its revaluation of its 40% stake in the Game Show Network. That will come back to bite Sony next year: The company projects that movie and TV revenues will improve in 2012, but profits will be down without the one-time benefit.
At Sony Music, the company says the continuing slide in CD sales mean that revenues will fall once again in 2012 after dropping 13% to $1.3 billion in the first quarter of 2011. But the operation’s cost-cutting efforts enabled it to report a $46 million operating profit, up from a $7.4 million loss last year.
Sony warned this week that a $4.4 billion charge to account for costs from this year’s tsunami and earthquake, as well as the recent cyber-attack on its PlayStation Network, would trash earnings for the the fiscal year that ended in March. The company says it wound up with a $3.1 billion loss on revenues of $86.5 billion, down about half a percent.
American Idol host Ryan Seacrest’s fat contract with CKX — the quirky company that owns the rights to the show — seems to have done a number on Idol’s profits. Despite all the upbeat talk about Idol’s ratings resurgence so far this year, the show’s 1Q operating profit for CKX of $13.6 million was down 17% vs. the same period last year on revenues of $28.4 million, down 2%. Publicly traded CKX breaks out results for Idol because it accounts for about 53% of the company’s revenues, which also include licensing income for Elvis Presley and Muhammad Ali. The report is as good a barometer as you’ll find for Idol‘s economic performance: CKX collects a license fee from Fox, as well as revenue for Idol-related syndication, sponsorship deals, merchandise and its concert tours. But CKX’s 48% operating profit margin for Idol in the three months that ended in March was the lowest 1Q result for the show since 2006, when CKX began reporting the show’s finances. CKX says that its Idol-related expenses came to $14.8 million. That’s up 17% from last year — and 260% from two years ago. The biggest change appears to be the $45 million employment contract that CKX struck with Seacrest in 2009 that locks him in through 2012. CKX has already paid Seacrest $33.5 million; Fox, in turn, pays CKX $5 million a year for Seacrest.
As expected, Sony Corp announced that Doug Morris is the new chairman of Sony Music, replacing Rolf Schmidt-Holtz.