ACTIVIST INVESTOR LOEB BLASTS SONY’S FILM CHIEFS

Investor Daniel Loeb, whose Third Point hedge fund reportedly owns about 6 percent of Sony Corp., has called again for the company to spin off 20 percent of its entertainment division and use the funds derived from that sale to prop up its electronics business. In doing so, however, he tore into the management of Sony Entertainment and described two enormous flops release by Sony Pictures his summer, After Earth and White House Down, as “2013’s versions of Waterworld and Ishtar, regarded by many in the industry as two of the biggest flops in Hollywood history. In a letter to Third Point investors, Loeb castigated Sony President and CEO Kazuo Hirai for his recent remark at the Allen & Co. conference in Sun Valley, ID in response to a reporter’s question about Loeb’s demand to sell off a stake in the entertainment business. “I don’t worry about the entertainment business,” Hirai said, “It’s doing just fine. Electronics is what needs the most work.” On the contrary, said Loeb, under the leadership of Sony Pictures Entertainment’ cochairmen Amy Pascal and Michael Lynton, Sony’s movie division has consistently generated profitability far below its rivals. Moreover, he continued, “Entertainment’s culture is characterized by a complete lack of accountability and poor financial controls.” Unlike its entertainment unit, Loeb continued, the entertainment division “remains poorly managed, with a famously bloated corporate structure, generous perk packages, high salaries for underperforming senior executives, and marketing budgets that do not seem to be in line with any sense of return on capital invested.” Sony later issued a statement reiterating its position that it is currently focused on revitalizing its electronics business but that it is also reviewing Loeb’s proposals. “Sony looks forward to continuing a constructive dialogue with our shareholders as we pursue our strategy,” the statement concluded.