The CEO of Third Point says that George Clooney was “a little hyperbolic” in August when the actor — in an interview with my colleague Mike Fleming Jr – defended Sony Entertainment execs from the hedge fund manager’s attacks.…
The company is telling analysts and investors to hold November 21 for a “Sony Entertainment Investor Day” to be held at the Sony Pictures Entertainment lot in Culver City. No word on why — or who’ll be …
Daniel Loeb In Retreat: Backs Off Sony For Now With Praise For CEO Kazuo Hirai And George Clooney; But Can He Be Trusted?
Nikki Finke who is on vacation will have a fuller Loeb vs Sony report soon.
Apparently, The Most Hated Man In Hollywood just wasn’t comfortable being labeled “The Most Dangerous Man To Our Industry” by George Clooney for all the world to read (via Mike Fleming’s exclusive Deadline interview and carried by Yahoo this past weekend). So now Third Point hedge fund CEO Daniel Loeb claims today he’s backing off Sony. But only after the putz created chaos and confusion inside a stable and successful studio, destabilized Michael Lynton’s and Amy Pascal’s and Jeff Blake’s management because two summer films After Earth and White House Down bombed at the domestic box office in what is a cyclical business, and imperiled many current jobs and future projects there. It’s disgusting. Not only does he seek to profit from the misfortunes of countries (Greece) and corporations (Sony after Howard Stringer crashed and burned the once great electronics giant), but in this case bullies a major entertainment company to the brink. Now Loeb will simply retreat to his East Coast dream homes and not give Hollywood another thought until the next time he feels the urge to kvetch. Kudos to Clooney for having the balls to hold up Loeb to public scorn. And congrats to Sony CEO Kazuo Hirai for not panicking or pressuring top executives to leave just to appease Loeb. Nice work, too, by producer Lynda Obst who gave a very forceful and cogent defense of SPE on CNBC yesterday. As for Ashton Kutcher and his worthless opinion, let’s see how his career careens when his Jobs indie flops and CBS/Warner Bros no longer pays him to make Two And A Half Men even more unwatchable.
Loeb today did an about-face and claimed to Variety he was backing off Lynton, Pascal, et al: “We support Hirai, and to the extent that he supports his management team and they can meet the board’s initiatives around transparency and profit margin improvement, I see no reason [the current executives] cannot do that. It is a decision for Mr. Hirai to make.” This is after Hirai sent a letter to Third Point (which owns 7% of Sony) and rejected Loeb’s unsolicited proposal to spinoff Sony’s entertainment unit. Suddenly Loeb was calling Hirai’s letter “thoughtfully written and detailed in its discussion of profitability and transparency. There was a lot there for shareholders to hang their hats on.” Loeb also admitted “it is probably unfair to focus on one or two bad movies, just in the way that Third Point from time to time can have one or two bad months or a bad year. … We’re really not focused on individual movies or their slate. I know I mentioned that in the last letter, but at this point it is more productive to support management and the goals advanced by Mr. Hirai in his letter.”
Loeb clearly never counted on being outed by Clooney for “knowing nothing about our business” and dissed so publicly and forcefully and publicly by the filmmaker. Loeb replied: “Notwithstanding the fact that the media likes to create a stir, I admire Mr. Clooney’s passion for Sony and his loyalty to Sony and his friends there.” But Loeb nervily suggested he and Clooney share a “common goal: a more disciplined company with better allocation of capital means less money spent on bureaucracy and more investment in motion pictures. We are all for intelligent investment in creative content. I believe our interests are aligned in a way he probably doesn’t realize.”
UPDATE: Third Point Responds Tonight After Sony Rejects Daniel Loeb’s Spinoff Proposal And Will Keep Entertainment Unit
UPDATE: The battling continues in this war of words. Daniel Loeb’s hedge fund Third Point tonight made clear it won’t stop destabilizing Sony and its entertainment division after the Japanese parent company rejected Daniel Loeb’s pressure to spinoff its showbiz unit. Third Point said it will “explore further options to create value for shareholders” and “welcomes Sony’s commitment to greater transparency and expects this will foster a culture of accountability. Sony has clearly recognized the performance issued we identified. In the new spirit of transparency, management should communicate more specific plans to improve entertainment results. A renewed focus on profitability and better margins should reduce bureaucracy and thus free up resources to invest in high quality motion pictures, filmed entertainment, networks and music, aligning shareholder interests, the creative community and consumers.”
Earlier today, Sony told Third Point CEO Daniel Loeb today it is rejecting his proposal to create a stock for its entertainment assets and then sell up to a 20% stake to the public. The board has “unanimously concluded that continuing to own 100% of our entertainment business is the best path forward and is integral to Sony’s strategy,” CEO Kazuo Hirai says in a letter to the hedge fund manager. “We do, however, expect to increase disclosure regarding Sony’s entertainment businesses.” Hirai adds that he’s “very focused on increasing margins at [Sony] Pictures.” That’s a particular sore point for Loeb, especially following the box office results for After Earth and White House Down, which he said last week “bombed spectacularly.” In response, actor George Clooney told my colleague Mike Fleming Jr. that Loeb is “a carpet bagger…who is trying to spread a climate of fear that pushes studios to want to make only tent poles.” Hirai says that he’ll cut costs while also “aggressively investing in our global television production business” and “building upon our diversified film slate strategy.” He notes that Sony has “instituted an even more exacting ‘green light’ process for film production, focusing more intensively on overall slate profitability as well as per film returns-on-investment.” Sony’s decisions were based on its belief that demand for premium content will grow “at unprecedented levels” as broadband and mobile devices become nearly ubiquitous. Shareholders “will benefit from owning all, rather than a part, of these valuable [content] assets.” Loeb is an investor in Variety with Deadline’s parent company, PMC.
The letter follows below:
Looks like Yahoo is more concerned about the Third Point founder’s intentions than everyone let on early this week when they announced that the company would pay $1.16B for 40M of Daniel Loeb’s shares, bringing his stake below 2%. …
Yahoo shares are down more than 3% this morning after the company said that it has bought back most of the shares owned by Third Point’s Daniel Loeb — leading him and colleagues Harry Wilson and Michael Wolf to resign from the board at the end of this month. ”Since our Board’s rigorous search led us to hire Marissa Mayer as CEO, Yahoo!’s stock price has nearly doubled, delivering significant value for shareholders,” Loeb says. “I’m confident that with Marissa at the helm and her team’s focus on innovation and engaging users, Yahoo! has a bright future.” The agreement to buy 40M of Loeb’s shares, at $29.11 apiece, will bring his stake in the company below 2% — and will count toward the company’s plan to repurchase $1.9B of its stock. Loeb is an investor in Variety with Deadline’s parent company PMC.
The sale makes sense for Loeb, the billionaire founder of hedge fund Third Point. He’s a value investor who likes to engage in deep research and then bet on relatively boring companies and assets that others overlook. Few would consider Yahoo undervalued after its stock appreciated 77% in the last 12 months. And the company is far from overlooked with former Google exec Mayer at the helm. The sale gives Third Point cash to devote elsewhere — possibly including Sony where Loeb is urging the company to issue stock in its movie, TV and music assets. (He wants Sony to hang on to about 80% and let the public trade the remaining 20%.) Meanwhile, Third Point remains a major shareholder in Yahoo.
But Yahoo shareholders may fear that once Loeb and his colleagues leave the board, the company may use the proceeds from the interest it sold in Alibaba to buy assets — like it just did with its $1.1B deal for Tumblr — says Barclay’s Capital’s Anthony DiClemente.
Here’s the release:
Earlier this week the CEO of hedge fund Third Point, Daniel Loeb, reiterated his desire for Sony to sell a minority interest in its entertainment assets. The fund now controls 6.9% of the conglomerate and Loeb believes CEO Kazuo Hirai should chair Sony, and a board specially created for the movie, TV, and music properties if the company follows Third Point’s proposal to sell as much as a 20% stake in them to the public. At Sony’s annual shareholders meeting in Tokyo on Thursday, Hirai said the company would “appropriately” consider Third Point’s proposal, but indicated a decision would not be imminent. “The entertainment business plays an important role in Sony’s future growth… This proposal strikes at the heart of what kind of company Sony ultimately will become in the future. We intend to take our time in discussing it,” he said, according to Dealbook. Some analysts are not so bullish on Sony spinning off the entertainment assets. In an open letter ahead of the meeting, Jefferies’ Atul Goyal suggested the company should spin off electronics instead.
“It’s premature at this point in time to speculate one way or the other,” Sony president and CEO Kazuo Hirai told CNBC today when asked whether an investor proposal to sell off portions of the company’s entertainment assets will succeed. The Sony chief made his comments as the company hired Morgan Stanley and Citi to review the proposal from shareholder Daniel Loeb’s hedge fund Third Point. “The process really is, as was described earlier, a discussion that needs happen really at the board level of the organization and we want to make sure that we have a through discussion of the merits of the proposal before we come to any conclusion,” he told the business network. Any discussion of Third Point’s proposal will have to wait until the new Sony board is elected later this month.
The billionaire founder of hedge fund Third Point startled many in entertainment today with the news that he has paid $1.1B for a 6.4% stake in Sony – and wants the company to create a stock for its movie, TV, and music businesses, selling as much as 20% to the public. But on Wall Street, where Daniel Loeb is an A-list celeb, the big surprises are that he showed any interest in showbiz — and that his language in the letter he sent to Sony was so polite. As a value investor managing more than $13B, Loeb, 51, likes to engage in deep research and then bet on relatively boring companies and assets that others overlook. Third Point’s most recent quarterly investor letter highlights its holdings in International Paper and mortgages, as well as John Malone’s European cable company Liberty Global. Although Loeb was raised in Los Angeles, the son of a lawyer and an historian, he’s known as a New Yorker. He earned an economics degree from Columbia University before he hit Wall Street. After working 12 years for firms including Citibank, Jefferies and Warburg Pincus, he founded Third Point in 1995 with about $3M from family and friends.
2ND UPDATE, 2:15 PM: Sony doesn’t slam the door on Third Point‘s proposal for it to sell up to a 20% stake in its entertainment assets — but doesn’t encourage the idea either. Sony “welcomes investment in the company,” SVP Corporate Communications Shiro Kambe says. But he adds: “We are focused on creating shareholder value by executing on our plan to revitalize and grow the electronics business, while further strengthening the stable business foundations of the entertainment and financial service businesses. As President and CEO Kazuo Hirai has said repeatedly, the entertainment businesses are important contributors to Sony’s growth and are not for sale, and we look forward to continuing a constructive dialogue with our shareholders as we pursue our strategy.”
UPDATE, 10:28 AM: The CBS speculation has taken on new life following this morning’s news that hedge fund Third Point wants the electronics company to create a public stock for its entertainment assets. Third Point proposed that Sony keep at least an 80% stake in the studio and music properties. Still, the plan “will concentrate investor attention” on the businesses and “the synergies that potential acquirers such as CBS might eventually realize,” says Pivotal Research Group’s Brian Wieser — who likes the idea. Sony shares are +10.5% in mid-day trading and CBS is +2.6%. Late last year Sony firmly rejected a sale after CBS’ Les Moonves mused that he “would want to look at them” if the properties were for sale. Sony execs might start to think differently if they take the movie, TV, and music assets public. The stock would give them a clearer sense of how much the properties are worth and, therefore, how much they could collect from a buyer. And Wiser believes that CBS could show that it would do a better job than Sony — which he says “has never bridged a significant cultural gap nor overcome its hierarchical bureaucracy to work better with the U.S.-centered operations.” CBS will be flush with cash soon as it prepares to sell and restructure its billboard ad properties.
UPDATE, 12:31 PM: The Wall Street Journal is reporting that Yahoo CEO Scott Thompson told the board over the weekend that he has been diagnosed with thyroid cancer. The WSJ says the disclosure might have impacted the company’s decision to accept Thompson’s resignation. The report adds that Thompson began telling colleagues as early as Friday that he was stepping down. Meanwhile, CNNMoney is reporting that Thompson could owe up to $7 million in upfront bonus money he received when he was hired in January.
PREVIOUS, SUNDAY PM: It’s official: Thompson’s four-month reign is over, following the disclosure that he misrepresented his bachelors’ degree. He “has left the Company,” Yahoo says — and the board has a deal with Third Point CEO Daniel Loeb, who has abandoned his proxy fight. Ross Levinsohn replaces Thompson as interim chief executive “effective immediately.” Roy Bostock has stepped down as Non-Executive Chairman, replaced by Fred Amoroso. In addition, hedge fund manager Loeb and two allies — media consultant Michael Wolf and restructuring expert Harry Wilson — will join the board on Wednesday. Former NBCUniversal CEO Jeff Zucker won’t be with them. With only three board seats going to Loeb’s group, Zucker says he agreed to step aside “to quickly facilitate a settlement.”
Here’s the announcement: