Bloomberg News

Sony Studio Cuts Jobs as Hirai Implements Cost Reductions (2)

January 23, 2014

Sony Corp CEO Kazuo Hirai

Kazuo Hirai, president and chief executive officer of Sony Corp. Photographer: Tomohiro Ohsumi/Bloomberg

Sony Corp. (6758)’s Hollywood film studio began cutting jobs, including its head of technology, as the unit moves forward with $250 million in expense reductions pledged by Chief Executive Officer Kazuo Hirai.

Chris Cookson, president of Sony Pictures Technologies, was among those let go, Charles Sipkins, a spokesman for the studio, said in an e-mailed statement yesterday. He didn’t provide the number of jobs cut.

“As part of the company’s previously announced efforts to evolve its operations, Sony Pictures Entertainment is absorbing the functions of Sony Pictures Technologies into various core businesses,” Sipkins said.

The move is among the first of $250 million in savings promised by Hirai in November, part of a plan to boost profit and keep full ownership of the movie, TV and music businesses after spurning a push by billionaire investor Daniel Loeb for a partial sale of the unit. Sony Pictures folded the technology functions into its business groups to “accelerate creative and technological innovation,” the company said.

Sony, based in Tokyo, also eliminated jobs at the studio’s home entertainment unit, according to a person with knowledge of the situation. Mitch Singer, the studio’s chief digital strategy officer who led the industry’s development of the UltraViolet film storage system, was let go, said the person, who asked not to be named because the moves weren’t public. Singer, reached by phone, declined to comment.

The company cut at least three dozen employees, Variety reported.

Fewer Films

Sony American depositary receipts fell 1.9 percent to $16.79 at the close in New York. The underlying shares rose 0.5 percent to 1,764 yen in Tokyo. They advanced 91 percent last year.

The company is also reducing the number of films from Columbia Pictures, shifting investment to television production and media networks, and identifying more savings, it told investors in November.

Loeb’s Third Point LLC pushed for an initial public offering of the entertainment assets last year after buying a stake in Sony. Hirai rejected the move in August, saying 100 percent ownership is crucial to the company’s success.

Loeb has said Sony is doing the things he wanted, including ensuring greater transparency and accountability. Third Point has “high hopes” for Hirai and his team to make difficult decisions needed to boost earnings and reach goals, it said in its fourth-quarter letter to investors on Jan. 21.

Improved Slate

The film unit posted a second-quarter loss after big-budget pictures “After Earth” and “White House Down” failed to connect with audiences. More recent movies “American Hustle” and “Captain Phillips” were commercially and critically successful, both garnering Oscar best-picture nominations. This year Sony will release a sequel to 2012’s “The Amazing Spider-Man.”

Sony, which sold 4.2 million PlayStation 4 game consoles during the holiday season, is scheduled to report third-quarter earnings on Feb. 6.

The studio business will probably earn $22.8 million in the third-quarter, compared with $25.3 million a year earlier, according to the estimate of Daniel Ernst, an analyst at Hudson Square Research.

“While the PlayStation 4 should continue to see strength in 2014, and Pictures has ‘Spider-Man,’ absent further weakness in the yen, it will be very hard for Sony to show growth this year,” Ernst said in an e-mail.

To contact the reporters on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net; Cliff Edwards in San Francisco at cedwards28@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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