‘No chance’ Sony will sell its struggling movie studio despite losses, executive says
Sony Corp. said Thursday that is has ruled out a sale of its struggling movie studio, just days after declaring a nearly $1-billion write-down on the film and television business.
The Japanese electronics and entertainment giant promised to turn the Culver City studio around after several painful years at the box office. The announcement appeared aimed at calming investors who have grown increasingly worried about the health of the company’s movie studio.
“There is no chance we will sell,” said Sony’s chief financial officer, Kenichiro Yoshida, on a conference call after the company reported its fiscal third-quarter earnings. “The pictures segment is an important business of Sony.”
The comments come in direct response to revived speculation that the studio would be put up for sale after Sony Pictures Entertainment Chief Executive Michael Lynton announced last month he would step down. Then, the company said it would take a $962-million impairment charge against the business, blaming faster-than-expected declines in the DVD and Blu-ray business.
The studio’s revenue declined 14% to $1.94 billion during the three months that ended in December, the company said, citing significantly lower film sales in the quarter, with flops including “Billy Lynn’s Long Halftime Walk” and “Inferno.” Its operating loss was $920 million, thanks to the previously announced write-down for the studio Sony has owned since 1989.
Movies were a major drag on earnings for the parent company, which reported a profit of $169 million, down 84% from the same period a year ago. Sales totaled $20.7 billion, down 7% year over year.
Sony also lowered its profit outlook. For the full fiscal year, ending in March, Sony Pictures is expected to post an operating loss of $715 million after the impairment charge. The company had previously projected profit of $250 million.
Sony Corp. CEO Kazuo Hirai has pledged to keep a second office on the Culver City lot in order to oversee the studio and find a replacement for Lynton, who plans to leave in a few months to focus on his duties on the board of the social messaging service Snapchat.
Lynton presided over several years of turmoil for the company at the end of his 13-year run as it tried to recover from the devastating computer hack of 2014. Embarrassing emails released in the wake of the cyberattack led to the exit of movie boss Amy Pascal, who was replaced by Tom Rothman.
Despite struggles in the entertainment business, Sony shares traded in the U.S. jumped 6% to $31.94 in Thursday trading as the company’s video games segment surged.
UPDATES:
3:15 p.m.: This article has been updated with Sony Corp. closing share price.
This article was originally published at 11:15 a.m.
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