Activist investor Dan Loeb sells stake in Sony Corp.

More than a year after questioning Sony Corp.’s management approach and sharply criticizing its film and television studio for a handful of box-office flops, activist investor Dan Loeb has sold his shares in the Tokyo-based company.

Loeb’s hedge fund, Third Point, had owned about 7% of Sony, whose entertainment arm, Sony Entertainment Inc., includes film and television studio Sony Pictures Entertainment, Sony/ATV Music Publishing and Sony Music Entertainment.

The sell-off caps a 17-month stretch that saw Loeb put Sony Pictures under a microscope and the studio respond by enacting major changes.

On May 14, 2013, Loeb hand-delivered a letter to Sony President and Chief Executive Kazuo Hirai that outlined a proposal centering on the beleaguered electronics giant’s making an initial public stock offering of up to 20% of its entertainment arm.

For years the company’s electronics business had suffered as competitors including Samsung and Apple strode past Sony in the television and smartphone business.

“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,” Loeb said in the letter.

Loeb later ratcheted up his rhetoric in public pleas for the company to adopt his proposal and said in his second-quarter 2013 letter to Third Point investors that Sony’s entertainment arm “remains poorly managed.” He also criticized Hirai for giving “free passes” to Sony Pictures Chairman and CEO Michael Lynton and co-Chairman Amy Pascal.

He also referred to two disappointing Sony Pictures releases -- the Will Smith action picture “After Earth” and the Channing Tatum film “White House Down” -- as “2013’s versions of ‘Waterworld’ and ‘Ishtar’ back-to-back,” alluding to two of the most infamous flops of all-time.

But on Tuesday, in a third-quarter letter to investors that was posted on Third Point’s website, Loeb said that Sony had made changes for the better in its entertainment business, including implementing cost-cutting measures, improving dialogue with investors and making management changes.

“We still managed to generate nearly a 20% return on this investment before exiting,” the letter said.

Sony rejected Loeb’s spinoff plan in August 2013, but the studio committed to big changes a few months later. At a November 2013 investors conference, Sony Pictures said it would cut costs and concentrate more on television.

“In 2013 we had some movies in the summer that didn’t meet our expectations,” Pascal said at the time. “That has led us to take a hard look at what we are doing.”

Sony Pictures, which includes Columbia Pictures, TriStar Pictures, Sony Pictures Classics and other entities, said at the meeting that it was lowering overhead by at least $250 million.

The studio has achieved cost reductions by eliminating jobs, and there have been several rounds of layoffs at the company in the last year.

Sony Pictures also has reshuffled its executive ranks, saying goodbye to Marc Weinstock, formerly its head of domestic and international marketing, and Chris Cookson, formerly president of Sony Pictures Technologies, among others.

Sony Pictures has also added several high-profile executives to the fold.

In August 2013, Sony teamed with former Fox Filmed Entertainment co-Chairman Tom Rothman to restart its TriStar Productions banner. And in December 2013, the studio named producer Michael De Luca, whose credits include “Captain Phillips” and the forthcoming “Fifty Shades of Grey” adaptation, president of production for its Columbia Pictures unit.

Also, in September, the new film company of Jeff Robinov, the former Warner Bros. Pictures Group president, signed a distribution deal with Sony Pictures. Sony will distribute up to six movies a year from the new firm, called Studio 8.

This year, Loeb has largely remained quiet when it comes to Sony. In January, the Los Angeles Times reported that, according to a source with knowledge of Loeb’s thinking at the time, the recent changes at the studio -- from the budget cuts to a new emphasis on television production -- had left the hedge fund investor “hopeful.”

For the fiscal first quarter that ended June 30, Sony Pictures posted operating income of $78 million, up 109% from a year earlier. Revenue increased 23% to $1.93 billion.

Since May 13, 2013 -- the day before Loeb delivered his letter to Hirai -- shares of Sony are down about 8% to $17.43.

“They have a long way to go and we continue to believe that more urgency will be necessary to definitively turn around the company’s fortunes,” Loeb said in Tuesday’s letter.

Sony Pictures declined to comment, saying: “We don’t comment on any specific investor’s shareholding.”

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