Sony Corporation is considering a proposal from one of its top shareholders, Third Point LLC, to spin off its movie and music businesses. Third Point, founded by billionaire Daniel Loeb, has a roughly 6% stake in Sony. In a recently published newspaper article, Loeb wrote: “Many casual observers would be surprised to learn that while Sony is electronics, much of its current value is derived from a hidden gem — Sony’s Entertainment division.” He said that an infusion of capital would help Sony with its “burdensome debt” and provide it with the financial resources to improve its electronics business. Loeb believes that taking up to 20% of Sony’s Entertainment public would help generate capital needed to overhaul Sony’s ailing electronics business. Sony’s entertainment division includes film and television studio Sony Pictures Entertainment, Sony/ATV Music Publishing and Sony Music Entertainment. Sluggish sales in the electronics market are having an impact on Sony’s bottom line. Sony has also found it increasingly difficult to compete in the smartphone market, but the company is beginning to shift more of its focus there because of significant growth potential.
