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Sony Corp poised to knock back proposal to spin off slice of entertainment business

By | Published on Friday 2 August 2013

Sony Corp

Officially the board of Sony Corp are still considering those previously reported proposals by shareholder Daniel Loeb to spin off 20% of their US-headquartered entertainment business, which includes Sony Music and Sony/ATV Music Publishing, though according to Japanese newspaper Nikkei directors are ready to dismiss the plan.

Loeb, whose Third Point company holds just under 7% of Sony Corp stock, says that if the conglom was to float a fifth of its telly-film-and-music unit it would provide capital to fund the revival of the company’s flagging consumer electronics division, and would for the Sony entertainment companies to be more transparent to investors.

Sony chief Kazuo Hirai has called Loeb’s pitch an “important proposal”, and said he would respond after the board had properly discussed the plan. But according to Nikkei, the CEO is poised to say “no” to the proposals. It’s thought some of Sony Corp’s key Japanese shareholders also oppose Loeb’s plan.

The knock back will follow the news that Sony Corp made a profit of 3.5 billion yen in the quarter to 30 Jun, a marked improvement on the 24.6 billion yen loss the group made in the same period in 2012. The weakening of the yen has helped a lot in that recovery, though some of Hirai’s restructuring and cost-cutting efforts may have also played a role. And on the electronics side, strong sales of the Xperia smartphone have contributed to the upturn.

In the latest set of Sony figures, Sony Music posted an operating income of 10.8 billion yen, up from 7.3 billion yen in the same period last year.