Sony for Sale? What's Next for the Studio Under New Chief Tony Vinciquerra
The exec's appointment as CEO adds to industry speculation that the studio's Japanese owner is eyeing a sale of its film and TV operations.
Three big questions face Sony Pictures Entertainment following the May 11 appointment of Tony Vinciquerra as its chairman and CEO: Will the longtime Rupert Murdoch associate and Fox TV executive slash personnel and expenses? Will he cut loose former Fox colleague Tom Rothman, the polarizing head of Sony's struggling movie division? And, perhaps the biggest: Is his job ultimately to prepare the studio for a sale?
Sony Corp. CEO Kazuo Hirai might have hoped to put an end to such questions by naming Vinciquerra, 62, to replace Michael Lynton when the latter departs June 1. (Vinciquerra will oversee film and TV but not Lynton's music portfolio, which is now the domain of Sony Music CEO Rob Stringer, who oversees the recorded music operation, and Sony/ATV chairman and CEO Martin Bandier, who oversees music publishing.) Instead, questions are likely to heat up, especially given the whopping $962 million write-down Sony took on the studio at the end of 2016.
"Could they look at spinning off part of it or working with a partner?" asks Atul Goyal, an analyst at Jefferies in Singapore. "It's possible, if they get the right price. But I believe the probability of that is quite low." Others see a strategic move as a possibility and point to Leslie Moonves as a potential buyer. The CBS chairman and CEO has longed to own a legitimate film studio and has had mixed success with his in-house CBS Films. Now that he's no longer eyeing a possible merger with Viacom (and its Paramount Pictures), Sony may be his best bet to get into the tentpole business.
CBS might be a good fit for Sony, too. While the studio's TV operation — which turns out such shows as the syndicated Jeopardy! and Wheel of Fortune along with AMC's Better Call Saul, NBC's The Blacklist and Kevin Can't Wait for Moonves' own CBS — is having considerably more success than its film division, it also faces serious challenges as long as it has no network connection.
Independent studios such as Sony and Warner Bros. Television increasingly are at a disadvantage to competitors like Disney and Universal since networks like ABC and NBC tend to favor material produced by their affiliated studios — or else demand a sizable piece of the shows they buy. "Not owning a network is killing [Sony] in the new model — that is, no massive syndication deals for studios, which is how they made money in the past," says one executive. "They need a network to own or partner with, otherwise the networks can squeeze them for part ownership on everything they agree to pick up."
While streaming giants Netflix and Amazon have become important buyers, they don't pay what syndication once did. "You'd think a studio without a network would tolerate more channels of distribution, but the money isn't there," says the insider. "Sony TV and Warners TV are going to be in a world of hurt."
On the film side, Rothman has had a tepid tenure since he took over Sony Pictures from Amy Pascal in February 2015. Among his recent releases, Passengers, which cost a reported $110 million, made a soft $303 million worldwide, and Smurfs: The Lost Village, which cost $60 million, grossed only $173 million. Sony's biggest hits of last year, in relation to budget, were The Angry Birds Movie, which cost $73 million and reaped $350 million globally, and Sausage Party, which cost $19 million and brought in $141 million.
Of its 2017 releases, the studio has high hopes for Rough Night, Spider-Man: Homecoming (a partnership with Disney), The Dark Tower and Jumanji: Welcome to the Jungle. Ironically, the better those films do, the stronger the rationale for selling the studio since their success would elevate its price tag.
While Hirai has insisted that Tokyo-based Sony Corp. isn't interested in unloading its entertainment assets, Vinciquerra, a corporate player ("He's intelligent, he's thoughtful, he's strategic," says Fox Network Group CEO Peter Rice) known for his nuts-and-bolts operational style rather than his creative vision, could be just the man to make a deal happen. "In the same way that people say, 'If you want something done, give it to a busy person,' with Tony, it's, 'If you want a hard thing done, give it to Tony,' " says Robert Simonds, CEO of STX Entertainment, where Vinciquerra sat on the board. "Not only will he do it, he'll make it look easy."
This story first appeared in the May 15 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.