Kazuo Hirai rejects Dan Loeb’s Sony break-up plan: “Our music business is profitable”
Tuesday, August 6, 2013/
Sony chief executive Kazuo Hirai has rejected a proposal by US hedge fund Third Point and its chief executive, Dan Loeb, that would see the electronics conglomerate sell its media assets.
Third Point first outlined the break-up suggestion in May, after acquiring around $US1.1 billion in shares in the struggling Japanese electronics giant.
In a letter to the activist shareholder, Hirai claims the company’s entertainment divisions remain profitable and are a core part of the company’s One Sony strategy.
“Sony Pictures and Sony Music are critical elements of our strategy and fundamental drivers of Sony’s growth for the future. We expect that our strategy will result in strong growth and increasing profitability through investing in high-growth, high-margin businesses, particularly in television production and international networks.
“Our music business continues to be profitable with margins we believe are generally in line with peers. We are nurturing and developing new talent, exploiting our vast catalogue and copyrights, and exploring other growth opportunities, including leveraging our vast music content for use with increasingly popular digital music service platforms.”
Hirai also rejects the use of asset sales as a mechanism for raising capital.
“Should we require capital, or in the event of unanticipated events, our priority would be to raise it without selling a portion of an asset fundamental to our growth strategy, and without unnecessarily burdening Sony’s ability to execute our business strategy for both entertainment and electronics,” Hirai says.
“We believe Sony is already changing for the better, and we are encouraged by the opportunities that lie ahead as we aggressively pursue our One Sony strategy.”
As SmartCompany reported in May of last year, Loeb first came to prominence after he accused former Yahoo! chief executive Scott Thompson of falsely claiming to have a bachelor’s degree in computer science in Yahoo!’s regulatory filings.
Sony recently achieved a quarterly profit of $US400 million off the back of strong Xperia Z smartphone sales.