Sony takes $1 billion writedown on its movie business
By Makiko Yamazaki and Tim Kelly
TOKYO (Reuters) - Sony Corp (6758.T: Quote) will write down the value of its movie business by nearly 112.1 billion yen ($976 million) in the third quarter, blaming weaker film profits as online streaming services sap demand for movie DVDs.
In a statement on Monday, the Japanese TV-to-gaming group said it had cut its outlook for earnings from DVD, blu-ray discs and other home entertainment in line with a market decline.
Sony, under Chief Executive Kazuo Hirai, has been slashing costs to end years of losses across its sprawling business, writing down over-optimistic valuations. It said on Monday that the pictures segment overall - including television - expected to see profits improve as a result of the changes.
It gave no specific details, but a spokeswoman said Sony was pressing ahead with a turnaround plan, strengthening markets outside the United States, including India and China, bolstering income from intellectual property and cutting costs.
Sony's movie studio has recently lagged behind competitors in box office share and big hits, and underperformed its rivals in the global box office.
In 2016, Sony films accounted for 8 percent of U.S. and Canadian ticket sales, ranking fifth among major Hollywood studios, according to the Box Office Mojo website. This year, Sony will be counting on films such as "Spider-Man: Homecoming", which it is co-producing with Walt Disney Co's (DIS.N: Quote) Marvel Studios, animated movie "Smurfs: The Lost Village" and action flick "Jumanji", starring Dwayne Johnson.
But the latest in a string of writedowns for the overall Sony group rattled its shares in Tokyo on Tuesday, sliding almost 4 percent before recovering to trade in line with the market. At 0430 GMT the stock was down around 2 percent.
"In our view, it is not easy to stay bullish when Sony makes these announcements so frequently," Jefferies analysts said in a note. "However, we believe these are not new issues but instead are an acknowledgement of its past strategic mistakes." Continued...