Sony’s film division will take a write-down of nearly $1 billion after revising its future profitability projection.
The impairment charge, which will be recorded in the quarter ending Dec. 31, 2016, is coming out of a downward revision that was “primarily due to a lowering of previous expectations regarding the home entertainment business, mainly driven by an acceleration of market decline.”
Specifically, Sony is absorbing the charge because of flagging DVD sales amid continued growth of streaming services.
“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,” the company said in a release.
Despite the decreased profits on the horizon, Sony said that the adverse impact of the reduction is expected to be largely mitigated by measures that have been identified to improve the profitability of the Motion Pictures business.
The write-down comes as Sony is reportedly searching for a suitor to whom it can offload its film division, which has been struggling to compete at the box office against rivals including Disney and Universal.
Despite the struggles, Sony is denying that the division is up for sale. “Make no mistake. Sony Corp.’s commitment to SPE remains unchanged. The value of high-quality content continues to rise. As we have stated on many occasions, including at SPE’s All Hands meeting at the end of last year, Sony Corp. sees SPE as a very important part of Sony group, and will continue to invest to achieve long-term growth and increased profits in this space,” Sony said in a statement, according to Variety.
Amid Sony Picture’s troubles comes the imminent departure of Sony Entertainment CEO Michael Lynton. Sony Corp. President and CEO Kazuo Hirai confirmed the news earlier this month and sounded optimistic that, even with the management reshuffling, Sony Pictures would right the ship.
Hirai thanked Lynton in a statement, particularly for the “broad structural and management changes” that he hoped would return Sony’s pictures business back to “profitability and future growth, though we recognize current challenges in motion pictures business and its turnaround will take some time. As we look ahead, we see our entertainment businesses as essential parts of Sony, and I look forward to working with Michael towards a smooth transition.”