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Investor puts more pressure on Sony for a part sale of entertainment

By | Published on Wednesday 19 June 2013

Sony Corp

Daniel Loeb’s investment firm Third Point has increased its stake in Sony Corp slightly, from 6.5% to 6.9%, and he celebrated the occasion by sending another letter to the Japanese firm’s top man, Kazuo Hirai, calling for 15-20% of the conglom’s US-based entertainment business to be floated.

As previously reported, while Sony Corp chiefs have in the past denied speculation that they were considering selling some or all of their film, music and telly assets, to free up funds to help speed up the revival of the flagging Sony electronics business, this time round the company’s board has said it is considering Loeb’s proposals.

In the latest letter, Loeb adds that there are other benefits to the idea of floating the Sony Entertainment company, other than raising quick cash, in that it would force that side of the business to be more transparent to investors, being directly listed on a stock exchange, rather than sitting under its parent company.

According to the Wall Street Journal, Loeb says the Sony entertainment business lacks the “discipline and accountability” of some of its rivals, adding: “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”.

Responding to the latest letter, Sony Corp said in a statement: “Sony welcomes investment in the company. We are focused on creating shareholder value by executing on our plan to revitalise and grow the electronics business, while further strengthening the entertainment and financial service businesses which generate stable profit. As President and CEO Kazuo Hirai has said repeatedly, the entertainment businesses are important contributors to Sony’s growth. We look forward to continuing constructive dialog with our shareholders as we pursue our strategy”.

Although Loeb’s proposals for a part-sale of the Sony Entertainment business are being considered in a way previous suggestions of the same have not, insiders say some other key investors in Japan oppose the plan, seeing it as short-termist.