How Diversification Has Helped Hollywood

by David Jenyns on January 12, 2009

Ah, Hollywood…always the darling of the glamour stocks. Diversification helps Hollywood, primarily in such fields as oil, real estate, phonograph records, television and electronics. While movie makers are digging oil on their studio properties, makers of phonograph records (Decca Records, Inc.) are making movies (Universal Pictures).

United Artists originated the concept of independent movie production, which has become an industry-wide trend for the sake of more economical production. United Artists is the leading distributor and financier of motion pictures made by independent producers. In some cases, profitable operations of a television subsidiary, like Columbia Pictures’ Screen Gems, were responsible for the over-all profitable earnings picture.

In the preceding fiscal year, Screen Gems had pre-tax profits of $1,973,757 while Columbia lost $4,419,142. Screen Gems was one of the first companies to enter television activities and is one of the major producers of television film series, distributors of feature motion pictures and producers of commercials.

After the separation, from Screen Gems, Columbia retained 89 percent interest or 1.8 shares of Screen Gems for each share of Columbia outstanding, giving stockholders that equity plus full participation in Columbia’s motion picture activities.

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