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Acquisition in India on Sony’s growth agenda

MUMBAI: Even if its plan of acquiring Southern broadcaster Maa TV Network did not fructify, Japanese electronics and entertainment major Sony Corp will be looking to acquire entertainment assets in India, said CEO Kazuo Hirai.

Hirai hinted at acquisitions in the TV networks business, possibly in India. He, however, did not give any details.

Beyond Multi Screen Media (then Sony Entertainment Network), Sony Pictures Television International marked its foray in the regional broadcasting space in India in March 2009, by acquiring Channel 8, a Bengali movie channel, which became part of SPTI’s bouquet, which also included AXN and Animax. MSM, at that time, also had Indian promoters, who later exited.

Later in April 2012, Sony Pictures Television announced a strategic alliance with Maa TV Network, wherein it agreed to pick up a 30 per cent in the company. However, the deal never got through and recently Star India acquired the broadcasting business of Maa TV Network.

Outlining the company’s corporate strategy for the next three years, Hirai emphasised that the key focus will be on driving growth and profitability. He described the company’s increasing focus on TV production and licensing of TV shows and music content as increasingly important revenue streams.

Addressing media in Tokyo, Japan, Hirai stated that Sony’s film, music, games, and device businesses would be key drivers of its profitability, while the focus would also be on the entertainment businesses to drive financial growth.

Hirai also outlined an ambitious target of operating profit of 500 billion Japanese Yen or $4.2 billion by 2017 and a reorganisation of Sony’s electronics business into separate divisions.

Hirai Sony“We will work on improved profit margins in the movie business, as well as bolstering content for regional channels, on-demand and streaming platform,” Hirai said.

He further announced the elevation of CFO Kenichiro Yoshida to the post of executive deputy president in addition to his existing responsibility.

Acknowledging that he had underestimated the costs of restructuring, Hirai promised a more rigorous approach, including more stringent cuts at Sony’s headquarters.

The company also intends to grow its devices segment, particularly its profitable image sensors, by expanding their applications from smartphones to medical treatment. It also intends to boost sales of its PlayStation 4 consoles and related internet-based services.

Structurally, the company plans to split off its video and sound business unit as a self-managing, wholly owned subsidiary beginning in October 2015. Other business units will also undergo the same process.

Sony will further make return on equity the central measure of its performance across the group’s varied divisions from now on, with a company-wide return target of 10 per cent. Hirai explained that each business division would be classified as a growth unit, stable revenue generator, or volatile division. Pictures, games, and music have all been designated as growth divisions.

Hirai said that he envisioned spinoffs of other units and the company would consider a sale of the TV business or the struggling smartphone arm. He said, however, that nothing was currently in the works.

“I think we have to keep those possibilities in mind,” he said.