Sony gave investors their most detailed look yet at its entertainment division — and it’s not a pretty picture.
The company’s movie unit posted a big loss on the heels of box-office bombs such as “White House Down” and “After Earth.”
In August, the Japanese entertainment and electronics giant rejected calls by activist investor Dan Loeb to spin off its US entertainment division.
To placate investors, however, Sony said it would divulge more information about its entertainment businesses.
Unfortunately, the company released fiscal second-quarter results on Thursday that revealed a horror show.
Sony Pictures, run by Michael Lynton and Amy Pascal, swung to a $180 million operating loss in the quarter ended Sept. 30, compared to profit of $80 million a year ago.
Movies such as “The Smurfs 2” underperformed, failing to stand up against last year’s “Amazing Spiderman.”
The movie arm contributed to a wider second-quarter loss and led Sony to slash its full-year profit outlook by 40 percent.
“We had higher expectations. This did not materialize,” Sony’s chief financial officer, Masaru Kato, told analysts during a call.
Sony is feeling the heat as its other businesses, such as TV sets, are struggling. Five of its nine segments operated in the red.
In May, Loeb, the head of hedge fund Third Point, prodded Sony boss Kazuo Hirai to spin off its US entertainment assets.
Ultimately, Loeb was rebuffed, but Sony agreed to his demands for a greater level of transparency, particularly at the film unit.
For the first time, Sony provided detailed supplementary information on its entertainment assets, including domestic and international box office returns, details of TV commissions and subscriber numbers for its extensive cable network assets.
Third Point analyst Tim Lash, who was on the earnings call, pressed Sony’s CFO to explain the movie loss:
“Was [motion pictures] the subsegment most responsible for the meaningful profit deterioration?”
Kato responded yes and said he’d give more detail on an upcoming investor day on Nov. 21 at the studio.
Sony’s movie release slate may look rosier since it shifted “Monuments Men,” a World War II ensemble starring George Clooney, from December to February.
Sony shares, traded as American Depositary Receipts on the New York Stock Exchange, fell 11 percent, to $17.25, on Thursday.