Sony takes $1 bln writedown on its movie business (updated)
31/01/2017 04:13
* Sony books $976 million impairment charge in Q3
* To lower its stake in M3 Inc to improve finances
* To record 37 bln yen gain within operating income from
sale
(Updates with Sony comment, background and detail on M3)
By Makiko Yamazaki and Tim Kelly
TOKYO, Jan 30 (Reuters) - Sony Corp 6758.T will write down
the value of its movie business by nearly 112.1 billion yen
($976 million) in the third quarter, blaming weaker film profits
as online streaming services sap demand for movie DVDs.
In a statement on Monday, the Japanese TV-to-gaming group
said it had cut its outlook for earnings from DVD, blu-ray discs
and other home entertainment in line with a market decline.
Sony, under Chief Executive Kazuo Hirai, has been slashing
costs to end years of losses across its sprawling business,
writing down over-optimistic valuations. It said on Monday that
the pictures segment overall - including television - expected
to see profits improve as a result of the changes.
It gave no specific details, but a spokeswoman said Sony was
pressing ahead with a turnaround plan, strengthening markets
outside the United States, including India and China, bolstering
income from intellectual property and cutting costs.
She also said Sony expected planned film releases, including
the next Spiderman movie due out mid-year to bolster earnings,
especially for the financial year from March 2018.
But the latest in a string of writedowns for the overall
Sony group rattled its shares in Tokyo on Tuesday, sliding
almost 4 percent before recovering to trade in line with the
market. At 0315 GMT the stock was down 2 percent.
"In our view, it is not easy to stay bullish when Sony makes
these announcements so frequently," Jefferies analysts said in a
note. "However, we believe these are not new issues but instead
are an acknowledgement of its past strategic mistakes."
Sony failed to excite cinema in 2016, despite productions
like Ghostwriter's and Da Vinci Code sequel Inferno, and
underperformed its rivals in the global box office.
Most of the movie writedown relates to goodwill recorded at
the time of Sony's acquisition of Columbia Pictures in 1989.
Monday's statement, however, also comes just over two weeks
after it announced the departure of its long-serving Sony
Entertainment chief executive, Michael Linton, who steps down
next month to become chairman of messaging app owner Snap Inc.
He will stay on for six months to help find a successor.
Snap, the owner of the popular Snap chat app, is expected to
go public early this year.
A replacement has not been named for Sony Entertainment,
which includes both pictures and television. urn:newsml:reuters.com:*:nL4N1F35BP
Sony has sold off underperforming businesses and has worked
to turn around others, including Sony Entertainment. It said on
Monday that the business remained "an important part of Sony".
To help cushion the impact of the writedown, Sony said it
would sell part of its stake in M3 Inc 2413.T , operator of
membership-based medical-related online services, trimming its
holding to 34 percent from 39.3 percent. urn:newsml:reuters.com:*:nL4N1FK11Z
Sony releases its third-quarter results on Feb. 2.
($1 = 114.8300 yen)
(Reporting by Makiko Yamazaki and Tim Kelly; Additional
reporting by Clara Ferreira Marques; Editing by Himani Sarkar
and Muralikumar Anantharaman)
((Makiko.Yamazaki@thomsonreuters.com; 81-3-6441-1039;))
Keywords: SONY OUTLOOK/