Dan Loeb:
We were surprised that after Entertainment’s highly
touted big budget summer releases — After
Earth and White House Down — bombed
spectacularly at the box office, CEO [Kazuo] Hirai,
speaking at the Allen & Co. Sun Valley conferences a
few weeks ago, brushed off these failures saying: ‘I
don’t worry about the Entertainment business, it’s
doing just fine’,” Loeb says. Calling the films “2013′s
versions of Waterworld and Ishtar,” Loeb says it’s
“perplexing” that Hirai gave “free passes” to Sony
Pictures Entertainment Co-CEOs Michael Lynton and
Amy Pascal, who he called “the executives
responsible for these debacles.”
Loeb adds that he’s concerned about the studio’s
pipeline, which he describes as “bleak, despite
overspending on numerous projects.” And the
television business “relies on old Merv Griffin
Production workhorses like Jeopardy! and Wheel Of
Fortune” but “has no hit network television shows,
only one major syndicated network show, the Dr. Oz
Show, and has missed the market for unscripted
television.”
Loeb says a stock offering would make the operation
more transparent and accountable. “While CEO Hirai
focuses on Electronics, Entertainment is in desperate
need of proper supervision,” the letter says. “We
believe Sony’s Board, which we understand continues
to consider our suggestions, has plenty of reasons to
worry about Entertainment and should enact our
partial listing proposal quickly.”
George Clooney:
“I’ve been reading a lot about Daniel Loeb, a hedge
fund guy who describes himself as an activist but who
knows nothing about our business, and he is looking
to take scalps at Sony because two movies in a row
underperformed? When does the clock stop and start
for him at Sony? Why didn’t he include Skyfall, the
007 movie that grossed a billion dollars, or Zero Dark
Thirty or Django Unchained? And what about the rest
of a year that includes Elysium, Captain Phillips,
American Hustle and The Monuments Men? You
can’t cherry pick a small time period and point to two
films that didn’t do great. It makes me crazy.
Fortunately, this business is run by people who
understand that the movie business ebbs and flows
and the good news is they are ignoring his calls to
spin off the entertainment assets. 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.”
Why is he dangerous?
“[Loeb] calls himself an activist investor, and I would
call him a carpet bagger, and one who is trying to
spread a climate of fear that pushes studios to want to
make only tent poles,” Clooney said. “Films like
Michael Clayton, Out of Sight, Good Night, And Good
Luck, The Descendants and O, Brother Where Art
Though?, none of these are movies studios are
inclined to make. 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. I am
no apologist for the studios, but these people know
what they are doing. If you look at the industry track
record, this business has made a lot of money. It
creates a lot of jobs and is still one of the largest
exporters in the world. 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.
“It’s crazy he has weight in this conversation at all,”
Clooney continued. “If guys like this are given any
weight because they’ve bought stock and suddenly
feel they can tell us how to do our business — one he
knows nothing about — this does great damage then
trickles down. The board of directors starts saying,
‘Wait a minute. What guarantee do you have that this
movie makes money?’ Well, there are no guarantees,
but if you average out the films Will Smith and
Channing Tatum have made, you will take that bet
every time, even if sometimes it just doesn’t work
out.”
“Hedge fund guys do not create jobs, and we do,” he
said. “On the movie we just made, we put 300 people
to work every day. I’m talking about nice, regular
people, and when we shot in a town, we’d put another
300 people to work. This is an industry that thrives;
there are thousands of workers who make films. You
want to see what happens if outside forces start to
scare the industry and studios just make tent poles
out of fear? You will see a lot of crap coming out.”