Sony rejects entertainment spin-off

Third Point's suggested break-up unanimously rejected by the board

The Sony board has rejected the proposal to spin-off as much as 20 per cent of its entertainment divisions.

The board returned a unanimous vote against the strategy, which was initially put forward by Daniel Loeb, CEO of Third Point LLC, one of Sony's largest investors.

However, in a letter to Third Point, Sony stressed the growing value of owning entertainment content in the digital, connected world. It also stated the belief that maintaining total ownership of its divisions encourages internal collaboration and efficiency.

"In addition, Sony's Board and management believe it has adequate capital resources to fund its business plans," the letter read. "Should Sony require capital, or in the event of unanticipated events, the company's priority would be to raise capital without selling a portion of an asset fundamental to the growth strategy, and without unnecessarily burdening Sony's ability to execute its business strategy for both entertainment and electronics."

"We are encouraged by our progress as we continue to execute on our One Sony strategy," added Sony CEO Kazuo Hirai. "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."

In May, Loeb argued that the "true value" of Sony's electronics and entertainment divisions was being obscured by forcing them to operate side-by-side. An entertainment IPO would improve the performance of its film and music businesses, while also raising cash for its electronics division.

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Latest comments (4)

Adam Campbell Game Production Manager, Azoomee4 years ago
Good, I personally think it would have been a bad idea. I see the company better as one that has highly connected divisions, and perhaps those ties can contribute to making better products with better ideas and shared knowledge.

Edited 1 times. Last edit by Adam Campbell on 6th August 2013 10:15am

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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.4 years ago
I was shocked that Sony actually gave such a ludicrous idea a thorough vetting at the executive level to begin with.

Good for Sony for being so professional in handling the situation though given who suggested (rather the amount of money that person represented), they may not have had much of a choice.
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Yannick Boucher Development Director, 2K China4 years ago
It was indeed a ridiculous idea. I guess the upside of them having "thought it through" (who knows how much) is that they can issue a release like this that both understates how ridiculous the idea was, and clearly shuts the door unequivocally.
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Jeff Kleist Writer, Marketing, Licensing 4 years ago
Sony has been selling assets like crazy, including their NYC and Tokyo skyscrapers. in order to bolster the on-hand capital to re-organize the electronics side of the company. Selling off a piece of SCE in March, after potential Christmas big business on a new console was definately what they've been preparing for.

I'm just glad that they actually looked beyond the next few quarters to the fact that entertainment is dependable income. There's definately a lot of people in the company that are old school, they see the electronics side to be the "real" Sony, and that's why this was reviewed at such a high level. Japanese companies turn like a cruise ship on one engine and half a rudder, and Sony's about halfway through that turn now, where they're either going to hit the reef or get back on course, likely using PlayStation in a similar manner to what Microsoft is doing with Xbox, but with the advantage of the cache the brand still enjoys around the world.
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