Sony has decided not to spin off its entertainment business to generate revenue required for growth. Venture capitalist, Daniel Loeb, who owns the hedge fund Third Point, has a large stake in Sony and advised the company to do aggressive moves in order to be profitable.
The company has refused his proposal and we have the complete statement below:
“Full control of Sony’s entertainment businesses drives internal collaboration, facilitates synergies, and allows the Company to be more nimble. Sony believes that the opportunities for collaboration among Sony’s businesses are numerous and increasing, and a rights or public offering would create the need for otherwise unnecessary and burdensome arm’s length intercompany relationships as a result of minority shareholder rights, thereby limiting Sony’s control and strategic flexibility.”
Sony Pictures has been a key asset for the company and CEO Kaz Hirai believes that they can raise revenue if needed by selling assets and spinning of its entertainment business is not the answer right now.
We are encouraged by our progress as we continue to execute on our One Sony strategy. We have made many changes during my tenure as CEO, and we are confident that we are on the right path. Sony’s entertainment businesses are critical to our corporate strategy and will be important drivers of growth, and I am firmly committed to assuring their growth, to improving their profitability, and to aggressively leveraging their collaboration with our electronics and service businesses. We are determined to pursue sustained growth in profitability and shareholder value, so that we can meet and exceed the expectations of all of our stakeholders.
It’s unclear what Loeb will do after this, but considering he owns a lot of stake in Sony, there are other ways in which he could persuade the company to do as he wants. Sony’s statement and strategy is now clear.