Sony says that continued ownership of its entertainment business is “fundamental” to its success.
Back in May, Daniel Loeb, the billionaire CEO of hedge fund heavyweight Third Point LLC, called on Sony to sell off its entertainment business, including Sony Pictures and Sony Music. He stepped up the urgency of his call in July, saying the entertainment division is “bloated” and expressing surprise “that Sony’s CEO does not worry that Entertainment continues to generate profitability levels far below those of its competitors.”
In a letter sent to Loeb today, however, Sony CEO Kaz Hirai expressed appreciation for Loeb’s “perspective” but rejected the idea of spinning off the division. Sony has “thoroughly considered the merits” of his proposal, Hirai wrote, but “after careful review, the Sony Board of Directors has unanimously concluded that continuing to own 100% of our entertainment business is the best path forward and is integral to Sony’s strategy.”
Hirai emphasized the company’s commitment to its “One Sony” strategy, which includes increasing growth and profitability of the Sony Pictures and Sony Music divisions, and a “revitalization” of its electronics business, including smartphones, televisions, cameras and game consoles. “We are also encouraged by the positive feedback from the announcement of the PlayStation 4, which is highly integrated with our leading networks and mobile businesses,” Hirai wrote. He also noted that Sony has other access to other sources of capital should the need for it arise, which he said are “more efficient” than a public offering.
Third Point currently holds a 6.5 percent stake in Sony, making it one of the company’s largest shareholders.