Daniel Loeb Suggests A Split In Sony


Daniel Loeb, CEO of Third Point, LLC, Sony’s largest investor, is not entirely pleased with the company’s efforts to return to profitability, as he thinks that not enough is being done. Controlling $1.1 billion worth in the company’s shares, equivalent to about 6.5% of the company, Loeb’s offered a suggestion. This proposal carries out a plan that would split Sony Entertainment and Sony Electronics, a move he explained in a personal letter to Sony’s CEO Kaz Hirai. The letter suggests that the electronic super power should “partially spin-off” Sony Entertainment, the part of the company dealing with music publishing, production of movies and TV shows.

Loeb believes that the fact that Sony has two large and powerful businesses that deal with many different challenges and issues which end up working against the company, as they “[obscure] the other’s true worth.”

In fact, Loeb’s proposal included allowing current investors of the company to basically own Sony Entertainment in a hands on manner, by giving them subscription rights. By conducting such a move, Loeb believes Sony will gain profitability while still ensuring that the shareholders’ economic interests are safeguarded.

In addition to proposing a split in the company, Loeb made an attempt to guarantee a hand in the matter to gain a more direct position by including somewhat of a self-invite onto Sony’s Board of Directors. He added that “beyond Third Point’s willingness to help facilitate a public offering for Sony Entertainment, we offer our assistance to implement our proposal and would gladly accept a seat on Sony’s Board of Directors.”

Alas, in regard to this proposal Sony was adamant on rejecting it. Even though the company is more than willing to welcome investments and is open to constructive dialogue with its shareholders, a Sony representative told the Times that as Hirai has previously assured, Sony Entertainment is still not on the market.