PolyGram result soars despite movie losses

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The Independent Online
POLYGRAM, the international music business controlled by the Dutch electronics group Philips, made record profits last year despite a dollars 20m after-tax loss in its fledgling US movie business.

Performers such as Lionel Richie, Luciano Pavarotti, Ugly Kid Joe and Def Leppard pushed sales 5 per cent higher to 6.6bn guilders ( pounds 2.5bn). Net income rose 13 per cent to 506m guilders.

The movie loss came in roughly as expected. Jan Cook, chief financial officer, does not expect the division to break even until late 1994 or early 1995. About 152m guilders was invested in the business.

Although it had one success in Candy Man, which cost dollars 8m and has already grossed dollars 25m, others have bombed. Ruby cost dollars 12m to make and has brought in only dollars 1.5m. Bob Roberts has almost broken even.

PolyGram has invested heavily in the movie business, paying dollars 35m last July for 51 per cent of Interscope, an independent Hollywood producer. It is also part- financing productions by Jodie Foster's Egg Pictures and has a joint marketing and distribution venture with Universal Pictures.

Compact discs increasingly dominate PolyGram's core music business: it sold 230 million CDs last year, up 13 per cent. Unit sales of pre-recorded cassettes dropped 11 per cent and vinyl fell 60 per cent, now accounting for just 3 per cent of album sales.

PolyGram, which is listed in New York and Amsterdam, proposed a full-year dividend of 0.65 guilders a share, up 8 per cent.