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November 30, 2005
Will the Blogosphere Break Up Sony?
Posted by Dana Blankenhorn
CBS was one thing.
But can the blogosphere cause the break-up of Sony?
Sony's marriage of content to technology was always a dicey one. It's been underway for nearly a generation, since founder Akio Morita led the purchase of what was then Columbia Pictures from Coca-Cola.
Early failures were blamed on the consumer electronics part of the business. Eventually Howard Stringer was named CEO, because he came from the content side.
But now the scandal launched by the blogosphere is getting completely out of control. California and Texas have launched lawsuits. Eliot Spitzer of New York, who is already running for Governor, is now sniffing around the company.
The smart financial play at this point? Spin-off the content arm.
Separating the content from the technology arms of Sony would hold many advantages:
- It would "unlock value" as the investment bankers say, another way of saying it would generate enormous fees for Wall Street.
- It could get many lawyers off the company's back.
- At minimum it would lay off any liability on the content side of the business.
The clock is ticking on this. If Sony wants to get out of trouble it needs to act quickly.
But I'd bet Jim Cramer would approve.
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Dana Blankenhorn has been a business journalist for over 25 years and has covered the online world professionally since 1985. He founded the "Interactive Age Daily" for CMP Media, and has written for the Chicago Tribune, Advertising Age, and dozens of other publications over the years.
1. Jesse Kopelman on December 1, 2005 05:07 PM writes...
Sony has failed colossally at getting any synergy between their hardware and content businesses. They should have been able to make an iTunes knockoff that had more sales (since they could sell their own content at a discount) and boosted sales of their own line of players. Instead they've worried about how they can protect their traditional distribution channels and efforts to that extent created a huge PR mess.
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