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TheStreet Open House

Dan Loeb's Pressure Play Pushes Sony to Reshape Film Studio

NEW YORK - (TheStreet) -- Daniel Loeb, the billionaire at the helm of Third Point, the New York-based hedge fund, chased Sony Corp. (SNE) and its entertainment division through the summer, badgering the media company to spin-off its movie and distribution units. Unaccustomed to outside influence, Sony quickly rebuffed Loeb's lobbying, rejecting the hedge fund chief's proposal to create a separate stock for the company's entertainment assets and then sell 20% of the equity to the public.

Four months later, Sony is taking steps to remake its entertainment unit by hiring  Bain & Co., the restructuring firm, to assist company management in cutting as much as $100 million in spending from its show biz units. The hiring was first reported by the New York Times.

While the decision to hire Bain to restructure isn't exactly what Loeb was pushing, the hedge fund chief's call for change dovetailed with Sony's Oct. 31 announcement that it cut its full-year profit forecast by 40% citing sluggish television and digital camera sales along with tepid box-office sales for "After Earth" and "White House Down."

Shares of Sony, which makes everything from TVs to PlayStation 4, to movies and medical equipment, were rising 0.4% to $18.80 in mid-morning trading.

Japanese companies have typically been resistant to change, particularly from outsiders, and previous attempts to target Sony have been unsuccessful. Yet, Sony's decision to seek outside assistance to reorganize the company's entertainment division reflects the difficulties in shaping a media company to grapple with distribution issues stemming from the merging of online and television.

Loeb, who has fought battles in the past, including a high-profile tussle over Yahoo!, argued that Sony would be a healthier and potentially a more nimble company following a restructuring that would allow management to focus on high-growth areas while spinning out Sony Entertainment.

Third Point could not be reached for comment for this story.

Sony, which is holding a meeting in Los Angeles on Thursday, has apparently stopped short of a spin-off in order to attempt to turnaround its entertainment group through cuts. After reporting a second-quarter loss, Sony is under increasing pressure to make substantial changes.

--By Leon Lazaroff and Chris Ciaccia

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