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"White House Down", starring Jamie Foxx and Channing Tatum was a box office disappointment for Sony Pictures.
UPDATE 11:30 a.m: In a move to streamline its operations, Sony Corp. announced plans Thursday to make $250 million in cuts at its Culver City-based entertainment division over the next few years, a move that could include layoffs and a reduction in the number of movies it produces.
Amy Pascal, Co-Chairman of Sony Pictures Entertainment, said the studio plans to release around 18 movies a year, down from around 20 the past few years. She added that Sony will release four movies next summer, compared to the nine it came out with last summer.
David C. Hendler, Senior Executive Vice President and Chief Financial Officer of Sony Pictures Entertainment, said to expect layoffs, though he offered no specifics.
"We will take a hard look at headcount," Hendler said during an investor conference held Thursday at the Culver City headquarters.
Hendler said Sony would save $150 million from overhead and efficiency initiatives, such as streamlining international distribution and cut another $100 million by driving down procurement costs, such as theatrical marketing.
"These reductions have already started and will continue through our fiscal year 2016," Hendler said. He added that Sony would invest more in high-margin, high-growth businesses, particularly television. At the same time, Sony will be reducing the number of movies it releases.
From Wed. Nov. 20, 12:59 PM:
It looks like cost-cutting will be a major focus of Sony's "Entertainment Investor Day" Thursday morning in Culver City.
The company hasn't released an agenda, but according to a story first reported in the New York Times, Sony will announce it has hired Bain & Co to identify $100 million in cuts, which would almost certainly include layoffs.
Bain is best known as the investment firm where former Republican presidential candidate Mitt Romney served as CEO.
A Sony spokesman declined to comment Wednesday and referred to the statement the company provided to The New York Times earlier this week: “As part of a nearly four-year process of increasing financial discipline, Sony Pictures is conducting a review of its business to identify further efficiencies. Our object is, and always has been, to operate an efficient studio that is uniquely positioned to capitalize on further growth opportunities.”
Sony's review comes after the entertainment division's financial performance was called into question earlier this year, by activist investor Daniel Loeb, who acquired a 6.5% stake in Sony through his hedge fund, Third Point Capital.
In a May letter hand-delivered to Sony chief Kazuo Hirai, Loeb made his case for why Sony should spin off its entertainment unit into a separate company listed on an American stock exchange.
In August, Sony's board rejected Loeb's proposal, arguing that Sony's entertainment division is more valuable as part of the Tokyo-based conglomerate.
The board also said it would release more details about the division's financial performance, which Loeb and other invesors had requested.
Recently the financial performance hasn't given investors much to be happy about. Last month, Sony reported its entertainment division lost $197 million in the most recent quarter and lowered the unit's outlook for the rest of the fiscal year.
Thursday's Investor Day event will feature top Sony brass including Kazuo Hirai, President & CEO of Sony Corporation, Michael Lynton, CEO of Sony Entertainment, and Amy Pascal, Co-Chairman of Sony Pictures Entertainment. It gets underway at 8a.m. PST and will be streamed on a live webcast.