Sony announced early Monday that its film unit, Sony Pictures Entertainment (SPE), is taking a non-cash goodwill impairment charge of nearly $1 billion.
“As a result of revising the future profitability projection for the Pictures segment, Sony Corporation recorded an impairment charge against the goodwill of the Pictures segment of 112.1 billion yen ($962 million) in the third quarter ended December 31, 2016,” Sony said in a statement. “This non-cash impairment charge is included within operating income (loss).”
“The downward revision was primarily due to a lowering of previous expectations regarding the home entertainment business, mainly driven by an acceleration of market decline,” the statement continued. “Underlying profitability projections of film performance were also reduced, but the adverse impact of that reduction is expected to be largely mitigated by measures that have been identified to improve the profitability of the Motion Pictures business.”
Despite the massive write-down, Sony CEO Kazuo Hirai and departing SPE CEO Michael Lynton said that the company remains committed to maintaining the film unit.
“We, the management of Sony Corp and Sony Entertainment, take the fact of recording a substantial impairment charge very seriously,” Hirai and Lynton said in a joint statement. “But make no mistake; Sony Corp’s commitment to SPE remains unchanged.”
Hirai will take a second office at the studio’s Culver City, California headquarters to oversee the conglomerate’s entertainment assets.
Lynton was the CEO of the studio through the turbulent months of a hack by North Korean leader Kim Jong Un in November 2014.
Since then, the studio has struggled to right itself and is regarded as among the weaker of Hollywood’s major studios. Several of the company’s longtime senior executives have shifted out in various shakeups, including longtime TV chief Steve Mosko.