Hedge fund wants part of Sony entertainment sold

A US hedge fund has proposed that Sony Corporation sell up to 20 per cent of its entertainment business and use the money to strengthen its ailing electronics unit, drawing a quick rejection from the Japanese consumer conglomerate.
In a May 14 letter to Sony President Kazuo Hirai, first published in The New York Times, hedge fund Third Point suggested Sony take 15 to 20 per cent of the entertainment unit public.
Third Point CEO Daniel Loeb said that would allow the Japanese maker of PlayStation game machines to fund improvements to its battered electronics operations.
Sony replied in a statement today that its entertainment business, which includes movies and music, is not for sale, and stressed it is trying to strengthen both that division and its electronics operations.

"As president and CEO Kazuo Hirai has said repeatedly, the entertainment businesses are important contributors to Sony's growth and are not for sale," Sony said.
"We look forward to continuing constructive dialogue with our shareholders as we pursue our strategy."

The proposal highlights a common criticism of Tokyo-based Sony that it has never been able to take advantage of having both electronics and entertainment under its wing.
Instead, one has tended to drag the other down. Some analysts have made suggestions similar to Loeb's.
Sony's electronics business has been ailing, particularly its TV division, which has lost money for nine straight years.

Sony fell behind in flat panel TVs, and has never been able to compete against Samsung Electronics Co. Of South Korea in TVs as well as cheaper makers.
Following four straight years of red ink, Sony reported a profit of 43 billion yen (USD 434 million) in the fiscal year that ended in March, helped by the recent decline of the yen.
It had suffered a loss of 457 billion yen (USD 5.7 billion) the previous year, which was the worst in the company's nearly seven-decade history.
Outspoken investors like Loeb are still relatively rare in Japan. Major companies tend to have networks of shareholders such as banks and group companies. Resistance to big change is strong.