Daniel Loeb Slams Sony Entertainment Execs for Summer Flops, Poor Oversight

Daniel Loeb Slams Sony Entertainment Execs for Summer Flops, Poor Oversight

Sony responds meekly to call for spin-off: Board of Directors "is reviewing its proposals"

UPDATE 4:01 PM PT: Sony just sent the following statement in response to Loeb's comments:

“Sony is focused on creating shareholder value by executing on our plan to revitalize and grow the electronics business, while further strengthening the entertainment and financial service businesses, which generate stable profit. The Sony Board of Directors, as previously noted, is reviewing its proposals. Sony looks forward to continuing a constructive dialogue with our shareholders as we pursue our strategy.”

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Activist investor Daniel Loeb came out swinging at the management team behind Sony Pictures, accusing the studio of a lack of accountability and poor financial controls in the wake of flops like "After Earth" and "White House Down."

In a letter to investors Monday, Loeb seized on remarks by Sony Corp. CEO Kazuo Hirai at Allen & Company's Sun Valley media retreat — that he was not concerned about the entertainment division because it was doing "fine."

Also read: Major Sony Shareholder Calls for Company to Spin Off Entertainment

"We find it perplexing that Mr. Hirai does not worry about a division that has just released 2013's version of Waterworld and Ishtar back-to-back,” Loeb wrote.

Blame for the twin disasters lies with Michael Lynton and Amy Pascal, the co-chiefs of Sony Pictures Entertainment, Loeb said.

"To us these latest blunders are prima facie evidence of our thesis that U.S. Entertainment based business is being ineffectively overseen and needs its own governance structure," he added.

Sony did not immediately have a comment.

Loeb's Third Point Management owns a 6.5 percent stake in Sony, a holding valued at $1.1 billion. He has been agitating — quite publicly — for Sony to spin-off its entertainment assets into a separate publicly traded company.

He theorizes that a spin-off would enable the company to focus on its electronics division and offload some of its debt.

Loeb's activism is notorious in investment circles. Last year, he orchestrated the ouster of former Yahoo CEO Scott Thompson over discrepancies in his resume.

"After Earth" cost $130 million to produce without taking into account marketing expenses, and brought in $235.9 million worldwide. "White House Down" carried a production budget of $150 million before marketing and grossed $116.2 million worldwide.