Sony rejects hedge fund's demand for partial divestment

Rejecting billionaire Daniel Loeb's call to sell a portion of its entertainment business, Sony said 100-per cent ownership of the film and music units was crucial to the success of the company.

In an e-mailed statement, Sony said the board decision was unanimous.

The company would start  providing additional disclosure about the entertainment business starting with the current second quarter.

According to Loeb's Third Point LLC hedge fund, it was ''disappointed'' with Sony's decision and intended to ''explore further options to create value for Sony shareholders.''

Kazuo Hirai, president and chief executive officer of Sony Corp said Sony's entertainment businesses were critical to its corporate strategy and would be important drivers of growth.

He added, he was firmly committed to assuring their growth, to improving their profitability, and to aggressively leveraging their collaboration with their electronics and service businesses.

Hirai has been pushing for a unified business extending across the production of TVs and mobile devices that could combine with music and film content to drive earnings after years of losses from electronics.

Third Point built a 6.9-per cent stake in Sony and pushed the board into selling as much as 20 per cent of its entertainment assets in an initial public offering.

According to Third Point, Sony management needed to communicate more specific plans for improvement of the results of its entertainment units.

''Sony has clearly recognized the performance issues we identified,'' New York-based Third Point said in the e-mailed statement. ''A renewed focus on profitability and better margins should reduce bureaucracy and thus free up resources.''

Loeb's Third Point LLC hedge fund initiated a campaign three months back for convincing the management over the sale of as much as a fifth of its money-making entertainment arm - movies, TV and music - to free up cash for revival of the electronics business.

Loeb had pitched his proposal for a public offering of part of Sony's entertainment business as consistent with prime minister Shinzo Abe's drive to boost economic growth through structural reform in Japan.