Sony Investor Seeks Spinoff of Stake in Entertainment Business

DOWN: Kaz Hirai

The new Sony CEO doubles the company's projected annual loss to $6.4 billion, its worst ever, and will trim 10,000 jobs. (Big layoffs at the film and TV studios are not expected.)

Hedge fund manager Daniel Loeb, who previously targeted changes at Yahoo, wants the conglomerate to sharpen its focus and boost its profits.

Hedge fund manager Daniel Loeb, who previously pushed for corporate changes at Yahoo, has called on Sony Corp. to spin off a stake in its entertainment operations, the New York Times reported, citing people familiar with the situation.

The report said that Loeb, whose fund Third Point has quietly acquired a 6.5 percent stake in Sony, also signaled that he would be open to taking a seat on the entertainment and consumer electronics company's board. The stake makes Loeb's company a big shareholder.

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Sony's entertainment business includes its film studio, which has released the likes of Skyfall, and music operations, whose artists include Will Smith and Taylor Swift. Loeb suggested a spinoff of a 15 to 20 percent stake of the entertainment business to Sony shareholders in a move designed to create a stock for the Hollywood operation, sharpen the conglomerate's focus, revive its electronics business and boost profits, the Times said.

The paper didn't provide further details.

Loeb flew to Tokyo this past weekend for meetings with government officials and Sony executives, according to the Times. He hand-delivered a letter on Tuesday to CEO Kazuo Hirai that praised his team's turnaround efforts but asked for more changes.

“While Third Point supports your agenda for change, we also believe that to succeed, Sony must focus,” Loeb wrote in the letter, the Times said.

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After the meeting with Sony representatives, the hedge fund billionaire told associates that he was impressed by Hirai and was supportive of Sony's management, the Times said.

His push for change is expected to face hurdles, given that activist investors don't have a track record of success in Japan. A spokesman for Sony told the Times he had no immediate comment on Loeb's proposals.

Last week, Sony reported its first annual profit in five years, helped by a weakening yen and some asset sales.

Third Point was also a financial backer of Penske Media's acquisition of entertainment industry trade paper Variety.


Twitter:  @georgszalai