For a few months now, Dan Loeb of Third Point has been criticizing Sony's management of their entertainment arm. In his view, Sony would be well served to spin off their entertainment arm, as noted by dealbook back in May:
Mr. Loeb said he believed that spinning off a portion of the entertainment business to Sony shareholders could sharpen the company’s focus and lead to higher profit margins, while helping to revive the core electronics business.
Well, that was May, and recently, the discussion has become a little more rough around the edges. Third Point's letter to investors has all the hard and dirty verbiage:
Keeping entertainment underexposed, undervalued and underperforming is not a strategy for success
Now, at first look, you might think of it as a simple spat between a company and one of its larger investors. Well, you're not George Clooney, and George Clooney has a big problem with it. That, also, is pretty hilarious.
During an interview with Deadline Hollywood, Mr. Clooney had some rather harsh words for Dan Loeb. Thankfully, the dealbook article did us the favor of selecting the most choicest of comments made during the interview. One of my personal favorites:
How any hedge fund guy can call for responsibility is beyond me, because if you look at those guys, there is no conscience at work. It is a business that is only about creating wealth, where when they fail, they get bailed out and where nobody gets fired. A guy from a hedge fund entity is the single least qualified person to be making these kinds of judgments, and he is dangerous to our industry.
Clooney appears to have made some minor errors, all of which stem from tough, hard to answer questions like, "What is a hedge fund" and "Hedge funds are banks, right?" But, ignoring these minor transgressions, I'm left with the impression that Clooney may not know what he's talking about. But, you'll have to look to the full interview with Deadline to have that question answered emphatically:
To have this guy portraying it that Sony management is the bad stepchild and doesn’t know what it is doing and he’s going to fix it? That is like Walmart saying, let me fix your town, putting in their store, strangling all the small shops and getting everyone who worked in them to work for minimum wage with no health insurance.
Yes, when a private investment group, who owns nearly 7% of the outstanding stock of a publicly traded company, has some criticism of said company, that is no different than having Walmart fix a town with minimum wage magic. A perfect analogy! Absolutely flawless! Clearly, no commenter here on WSO can craft a more perfect comparison (yes, that is a challenge)!
Astounding and absurd metaphors aside, Clooney is not without his own theories as to why Third Point is accumulating such a large position in Sony:
What he’s doing is scaring studios and pushing them to make decisions from a place of fear. Why is he buying stock like crazy if he’s so down on things? He’s trying to manipulate the market.
Okay, come on man, really? Surely, George Clooney, an extremely successful actor, has someone on hand who can tell him what's going on. This is just ridiculous. Nevertheless, what boggles my mind is how vehemently Clooney is fighting against a spinoff for Sony's Entertainment division. Sure, it's a pretty big deal for Sony, but it seems like a pretty odd position for an actor to take. Well, that is, until you notice this small passage:
It’s worth noting that Sony backs Mr. Clooney’s production shop.
There we go.
Jesus.
I saw this a few days ago. I also just remembered why I dislike LA so much.
George Clooney seems to have forgotten who owns the company.
Baffling.
He's been "reading" a lot about Dan Loeb? Where? HuffPo? reddit?
I love how he completely overestimates the importance of his own industry. Oh, of course, it's all about the movie business. White House Down sucked, therefore Dan Loeb attacked Sony. It has nothing to do with the electronics segment losing money hand over fist. Or the insurance segment having no real synergies with the other lines of business.
Exactly - Sony is literally running off of the fumes of success their brand created years ago - they simply cannot compete with companies like Samsung.
Eh, I think he had a few good points, particularly with regard to how the total bottom-line focus can lead to nothing but tentpole / sequel type crap.
Also, let's not downplay the importance of the entertainment industry. It's the fucking entertainment industry, folks. Without movies, TV, etc., life would be a whooole lot shittier. And Clooney has made some gems.
Entertainment Industry > Financial Engineering
u mad bruh?
This guy is so deep in the closet he's in Narnia
as a film fan, Clooney hit the nail on the head as far as Loeb being shitty for the industry. the movie business is one of those weird industries where art and capitalism meet and they are generally always in conflict with each other. yeah Clooney listed some great films that recouped their budget but for the most part most really good films hardly make any money.
this is nothing new and it's been going to shit ever since the 80s. eventually the great films will no longer come from studios. with more and more films acquiring distribution through iTunes and funding from kickstarter, i bet Hollywood will eventually separate itself from the indie market entirely and just focus on big loud blockbusters.
Clooney is right about one thing tho: Hollywood's fixation on producing "tent-pole" franchises that can produce sequals has led to a serious decline in the quality of films. Given the rise of other forms of entertainment, I would be much more inclined to listen to someone who has actually acted in and directed films and worked in the studio system his whole career vs. some hedge fund manager who knows nothing but what the last film brought in and has been in the business as long as a college intern if i was a shareholder.
Funny that everyone mentions the Samsung comparison. Sony electronics have really gone down the tubes in comparison. I have a samgsung fridge, a samsung LCD and a samsung laptop. All were lower price and better quality than their Sony counterparts (Although I don't know if Sony makes a fridge; I bought the Samsung simply because I was so satisfied with their other products and it looked like a good price.
On another topic, does anyone know anyone who works for Samsung? I hear the hours there make IB look like a vacation.....
Confirmed. Former coworker left the firm because "at Samsung, Samsung is your life." She was at the Korean HQ.
Doesn't matter. George Clooney is still awesome.
Whose fault is that really though? We tout capitalism all the time on this board... except when it comes to the arts. These cheesy tentpole films are successful because we the consumers make them successful. Maybe if the general public had a higher average reading grade level or an interest that went a little deeper than the next Hulk remake, quality films could be made while simultaneously maximizing shareholder value. The way I see it: Loeb's right, and it's not really his concern as a shareholder whether the movies that come out have any artistic value to them.
If I may ask, what role was she in?
i think the concern from a business point of view is for the bigger picture...if all these studios can do is churn out comic book remakes that may not be a lasting business model. its like someone at bear stearns in 2007 saying "the public wants us to keep securitizing crappy loans, so we should lever up that business and forget the rest of the business that has gotten us by for 100 years...". Some hedge fund manager who is agitating for shareholder friendly corporate actions based on three bad movies could care less about the long-term health of the studio, he is looking to create a pop in the stock thats it.
Some finance role, totally unsure of what specifically. This was in 2011, could be worse now.
How about this:
"Yes, when a private investment group, who owns nearly 7% of the outstanding stock of a publicly traded company, has some criticism of said company, that is no different than when George Clooney (a successful member of United States society) meets personally with Barack Obama in 2010 to discuss government policy"
Disclaimer: I don't actually know much about this meeting and it looks like it may have been for a good cause
long-term capital management was bailed out
Dolores labore voluptatum quam neque sed est. Repellendus reprehenderit perferendis illo omnis et. Molestias labore nisi consequatur sapiente. Voluptatem culpa natus earum similique fugit. Incidunt velit aut nam aperiam. Eos unde natus velit doloribus velit et a. Ut numquam reiciendis aut natus.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Ad eius vero deserunt dolor. Et ut qui quod exercitationem nemo assumenda modi. Dolores sed ex repellat. Cum sequi pariatur eligendi voluptates inventore possimus et. Sint aut ducimus et velit iure omnis.