During my high school days, Walkmans were still the go-to portable music devices amongst my peers. Just around the time Apple released its first iPods, and before the entire music industry was revolutionized with the focus towards digital releases, CDs were the norm, with Sony being the biggest name in the game with its huge selection of CD, tape, and portable radio players. Of course, a lot has changed over the past decade, with most high school kids probably unfamiliar with the “Walkman” brand. Even outside of music devices, Sony’s reputation as the top dog in consumer electronics has dropped a bit with other companies like Samsung and Microsoft rising up to take a chunk out of Sony’s hold on the electronics industry.
Nowadays, Sony’s largest earnings come from its various entertainment divisions, including Sony Pictures Entertainment (film and TV) and Sony Music Entertainment (self-explanatory). Last week, Daniel Loeb, chief executive of the hedge fund The Third Point that owns the largest stake in Sony at 6.5%, suggested that Sony sell a portion of its Entertainment holdings in order to amass larger profits from the divisions. Loeb’s proposed idea would involve Sony selling a 15-20% stake in its Entertainment divisions to existing shareholders, allowing Sony to focus on its electronics division, which includes the aforementioned Walkman line of products. The proposal, Loeb predicts, would result in a 60% boost in share value.
Of course, Sony is reluctant to sell off portions of its most profitable divisions, especially considering Sony Pictures’ stance as one of the top TV/film production/distribution studios with franchises like Ghostbusters and Spider-Man, as well as various franchises under Sony Pictures-owned Columbia Pictures (Skyfall, Men in Black, etc). Sony Music, meanwhile, is Bruce Springsteen’s label, whereas Sony/ATV Music Publishing holds the rights to The Beatles’ and Michael Jackson’s catalog along with the Jackson estate.
A board meeting has been scheduled to discuss Loeb’s proposal which will determine Sony’s official decision on the matter. For now, this is an interesting development that could shape the future of Sony and its various divisions.
[via Bloomberg, via The Verge, via New York Times]