“Billionaire investor Daniel Loeb’s proposal to separate Sony Corp. (6758)’s movie, music and TV businesses would give the Tokyo-based company a chance to join the 3 1/2-year media rally it has missed.
Loeb, founder of Third Point LLC, yesterday recommended selling as much as 20 percent of Sony’s entertainment unit in an initial public offering that would free it from the struggling electronics business. As an independent company, the maker of “Spider-Man” movies would benefit from more disciplined management, investor attention and fatter profits, giving a $6.1 billion lift to Sony’s market value, he wrote in a letter to Chief Executive Officer Kazuo Hirai.
The move from Sony’s largest shareholder comes as media stocks surge to all-time highs amid growing optimism that makers of films and television shows will weather a decline in home-video sales by signing online outfits like Netflix Inc (NFLX). and Amazon.com Inc. (AMZN) as distributors. With Sony the top-grossing U.S. film studio last year with year with $4.4 billion in worldwide ticket sales, the spinoff could boost the value of its entertainment unit as much as 50 percent, according to Paul Sweeney, a senior analyst at Bloomberg Industries.
“Media stocks have been ripping over the past three-and-a-half years,” said Sweeney, who estimates Sony’s entertainment units, valued at an implied $8 billion, could fetch as much as $12 billion. “Investors have a hard time valuing those businesses within the greater Sony conglomerate.”
Entertainment Boom
Media stocks including Walt Disney Co. (DIS), Lions Gate Entertainment Corp. (LGF) and CBS Corp. (CBS) are at or near all-time highs. Since January 2010, the S&P 500 Media Index has more than doubled, while Sony, with one of the world’s largest collections of movie, television and music businesses, has declined 28 percent….”
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