'White House Down': Sony's Second Summer Flop Arrives Amid Call for Spinoff
"This is a negative for what is generally a well-run studio," says one analyst as shareholder Daniel Loeb pushes for a partial spinoff of the firm's entertainment businesses.
Over the weekend, Sony Corp.'s film studio was dealt its second box-office disappointment of the summer in the form of action film White House Down as it continues to face a call from activist shareholder Daniel Loeb for a partial spinoff of its entertainment businesses.
The movie, starring Channing Tatum and Jamie Foxx, opened to a dismal $25.7 million domestically after costing at least $150 million to produce, excluding a $150 million-plus marketing spend.
Meanwhile, Will and Jaden Smith's sci-fi epic After Earth has all but ended its North American theatrical run after four weekends, topping out at only $58 million. Overseas, the Sony film, which was critically panned, has earned only $130.9 million, with its release in China still coming up.
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Wunderlich Securities analyst Matthew Harrigan last month called After Earth "an ill-timed flop for Sony, given its challenges from hedge fund manager Dan Loeb."
On Sunday, Harrigan told The Hollywood Reporter that the weak White House Down opening will similarly not boost the position of Sony and its CEO, Kaz Hirai, who has promised that the conglomerate's board would evaluate Loeb's proposal. "Kaz Hirai must have been feeling good about winning the gamer PR campaign at E3 around pricing used games and Internet, but this is a negative for what is generally a well-run studio that is adroit at counter-programming," Harrigan said. "Right after After Earth, this doesn't help, either. Hopefully Elysium and Smurfs 2 perform globally."
Loeb's hedge fund Third Point in mid-June said that it has slightly increased its stake in Sony to 6.9 percent as it continues to push for an IPO of a 15 to 20 percent stake in the conglomerate's film and music businesses. In his second letter to Hirai then, Loeb argued that Sony's entertainment business lacks the "discipline and accountability" of many peers.
"In light of this track record, it seems difficult to argue that entertainment would not be strengthened by the transparency that comes with public reporting, an active media analyst community evaluating financial performance regularly, and an expert board with strongly aligned incentives," Loeb wrote.
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Third Point has suggested that Sony's entertainment operations could be worth about $10 billion, with an IPO possibly raising as much as $2 billion. That money could go toward acquisitions and other investments.
Observers pointed out that Adam Sandler comedy Grown Ups 2, which opens July 12, and Matt Damon and Jodie Foster's sci-fi drama Elysium, set to open in August, have been drawing good buzz for Sony. The studio also has had recent success with the modestly budgeted Seth Rogen apocalyptic comedy This Is the End, which has grossed roughly $75 million in the U.S. after three weekends.
Last weekend, After Earth topped the Japanese box office in its opening weekend but failed to light it up.
The film grossed $2.57 million in its first three days on more than 570 Japanese screens, with local analysts predicting a $10 million final total in the country, the third-largest theatrical market after the U.S. and China. Analysts have said the film may struggle to cover its production and marketing budget.