Films rake in a lot of money. Right? Right. Last year, movies in the U.S. and Canada generated $7.66 billion at the box office, and that doesn't include all of the revenue from the ancillary markets.

But even though the studios are bringing in record amounts of money, the costs of making movies are increasing as well, eating away at the bottom line. The Motion Picture Association of America reports that average production costs for a studio movie in 2000 were close to $54 million, and that figure doesn't take into account marketing costs or stars' salaries, which can go as high as $20-$25 million for A-list box-office draws like Tom Cruise and Julia Roberts.

So in the end, just how much does a studio's revenues contribute to its owner -- conglomerates like AOL Time Warner or Viacom or Walt Disney?

"Somebody told me that Warner film, the studio part, is 5 percent of AOL Time Warner gross," says Bill Mechanic, formerly the studio head at Twentieth Century Fox and now an independent producer. "You know, you could have the biggest movie in the world and it doesn't have that much effect."

The tables below show the revenues that studios help generate for their parent companies. Contrast those numbers with how much operating income the parent companies' business segments are producing. (Operating income is essentially revenues minus expenses, excluding interest and taxes; net income, on the other hand, is what is commonly referred to as the "bottom line.") For instance, Disney's "studio entertainment" -- including Walt Disney Pictures, Touchstone Pictures, and Miramax -- generated almost $6 billion in revenue for Walt Disney Corp. But after the costs are tallied, the operating income for that segment of the business was only $110 million.

Other companies posted much higher operating revenues. Note, however, that the companies' definitions of the business segments that house their studios may also include other operations, such as television studios and theme parks, making it difficult in those cases to isolate the studios' contributions.

Studio Entertainment accounts for 23.6 percent of the revenue that Disney's top
business segments generate, and only 2.7 percent of their operating income.

Filmed Entertainment accounts for 21.7 percent of the revenue that AOL Time
Warner's top business segments generate, and only 9.1 percent of their
operating income*.

Business
Segment

Revenue(in millions)

Operating
Income(in millions)

AOL

7703

2350

Cable

6054

2831

Filmed
Entertainment**

8119
(21.7%)

796
(9.1%)

Networks

6802

1502

Music

4148

518

Publishing

4645

747

Combined

37471

8744

* Figures
are pro forma, or projected; estimations for operating income are before
depreciation and amortization.
** Includes Warner Bros. Pictures, New Line Productions, Fine Line Features,
Warner Home Video, Warner Bros. TelevisionSource: AOL Time Warner Annual Report 2000

Entertainment accounts for 13.5 percent of the revenue that Viacom's top
business segments generate, and 8.9 percent of their operating income.