Sony Takes About $1 Bln Charge On Movie Segment; Cuts Its Stake In M3

(RTTNews) - Sony Corp. (SON.L, SNE) said it recorded an impairment charge against the goodwill of the Pictures segment of 112.1 billion yen or about $1 billion in the third quarter ended December 31, 2016, as a result of revising the future profitability projection for the segment. Separately, Sony said it would cut its stake in the medical web service M3 Inc to 34 percent from 39.34 percent.

Meanwhile, the company noted that the impact on the consolidated results forecast for the fiscal year ending March 31, 2017 of the impairment and other factors is currently being revaluated and will be disclosed at the earnings announcement for the third quarter ended December 31, 2016 scheduled to be held on February 2, 2017.

The impairment charge resulted from a downward revision in the future profitability projection for the Motion Pictures business within the Pictures segment. The downward revision was primarily due to a lowering of previous expectations regarding the home entertainment business, mainly driven by an acceleration of market decline. Underlying profitability projections of film performance were also reduced, but the adverse impact of that reduction is expected to be largely mitigated by measures that have been identified to improve the profitability of the Motion Pictures business.

Profit in the Pictures segment overall is expected to grow due to measures currently being undertaken to improve the profitability of the Motion Pictures business and further expansion of the Television Productions and Media Networks businesses. The Pictures segment continues to be an important business of Sony.

Sony said that it has decided to sell 17.30 million shares of its 127.38 million shares of M3, Inc. to Goldman Sachs Japan Co., Ltd to improve Sony's operating results for the fiscal year ending March 31, 2017 and to strengthen its financial resources. Following the sale, Sony plans to continue to hold the remaining shares of M3 as its major shareholder. Sony expects to record a gain within operating income of approximately 37 billion yen during the fourth quarter of the fiscal year ending March 31, 2017.

Sony plans to disclose the net sale price of the shares on January 31, 2017.