Sony loses a billion at the movies

12a719ae45c2c72fea1a5493b62c4679There have been rumours for a while now that Sony was thinking of off-loading its movie business, and now it is clear why.

The outfit has dropped nearly a billion dollars on its entertainment business. Sony said it will write down $976 million in the third quarter, blaming weaker film profits as online streaming services sap demand for movie DVDs.

Sony 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 because of the changes.

The company said that it 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 fell behind competitors in box office share and big hits, and underperformed its rivals in the global box office.

In 2016, Sony films accounted for eight percent of US 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’s Marvel Studios, animated movie “Smurfs: The Lost Village” and action flick “Jumanji”, starring Dwayne Johnson.

It is a bit risky placing your hopes in Smurfs. The little blue demons are evil.

Sony has been writing down things faster than a journalist hearing a Trump confession and its shareholders are more rattled than a set of Victorian windows in a tornado.

Most of the movie write down relates to goodwill recorded at the time of Sony’s acquisition of Columbia Pictures in 1989.

But it also comes two weeks after it announced the departure of its long-serving Sony Entertainment chief executive, Michael Lynton, who steps down next month to become chairman of messaging app owner Snap.

To help cushion the impact of the write down, Sony said it would sell part of its stake in M3 which runs medical-related online services, trimming its holding to 34 percent from 39.3 percent.