Sony doesn't need any help from hackers to spook its movie bosses

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The Independent Online

The cancelled release of The Interview and a trail of leaked emails between executives and movie stars threw an unwelcome spotlight on Sony Pictures. The giant corporation it is part of has suffered no less of a testing time.

Sony produces everything from batteries to Bowie, straddling technology hardware, music and movies like no other business. The Japanese company is big, with all the ingredients to take advantage of media convergence, but it is not always successful. It seems to be perpetually restructuring itself, trying to reduce costs and battling with a powerful array of competitors: Microsoft, Warner Bros and Apple.

Over the past few years, movies have been a bright spot for it. The company has benefited from the revival of the Spider-Man and James Bond franchises. The music arm has also done well, relying on two men: Simon Cowell and the late Michael Jackson. Sony half-owns Syco, the production company behind The X Factor and Got Talent brands, and also owns Jackson’s back catalogue. There is a similar success story in games consoles, where the PlayStation 4 strongly outsold Microsoft’s Xbox One and the pair marginalised Nintendo.

However, the division that generated the most profit last year is the one that few associate with Sony in Europe – its banking and insurance arm, which mainly operates in Japan.

Its mere existence is a clue to Sony’s sprawl. Founded in Tokyo in 1946, the company grew to become a world leader in media and consumer electronics, famous for the Sony Walkman and some of the earliest mobile phones. But that didn’t stop it struggling with new realities when faster-moving rivals moved into its territory.

No wonder that an outsider to Japan, the Welsh-born Sir Howard Stringer, was appointed to lead a shake-up. He was partially successful, somehow keeping up with a punishing travel schedule that saw him split his time between Tokyo, New York and, every so often, the family home in Oxfordshire.

Sir Howard championed a “four-screen” strategy, arguing that Sony could lead the technology pack by producing everything from smartphones to tablets to personal computers and TVs.

Soon after he stepped down two years ago, the strategy changed. Spooked by a credit rating cut to junk status, Sony moved quickly, selling its Vaio laptop division and spinning off its Bravia TV-making arm, which had been squeezed by rivals Samsung and LG and unprofitable for a decade.

Sony’s president and chief executive, Kazuo Hirai, intent on reducing its 141,000-strong workforce, also flagged that the group would post a net loss for the second year running.

His desire for change is worth noting, as Sony’s movie-making bosses reel from being hacked by outsiders. The next threat to them could be characterised as the enemy within. Part of Mr Hirai’s plan to get Sony into shape is to slash $300m (£190m) of costs from the movie division by the end of next year. Could cyber terrorists ever hope to wreak such devastation?

Telecoms mergers? We might have to get down an all fours

 You have to wonder whether Gavin Patterson, the BT chief executive, will be quite so effective in the auction of Premier League rights next spring as he was at playing rival mobile networks O2 and EE off against each other. Now that BT has linked arms with EE – a £12.5bn move that recreates the giant it used to be – the question is how will the competition react?

At a telecoms industry drinks party this week to mark the departure of a long server – one who remembers when a little company called Vodafone was spun out of Racal Electronics – people were eyeing each other nervously, wondering who will be working for whom this time next year.

Now it has been jilted at the altar, O2 is in play. It could be an interesting prospect for Sky, which has always insisted it didn’t need a mobile network, but the £10bn price tag might be too much for Hutchison Whampoa, whose Three network bought O2 in Ireland last year. Vodafone buying out broadband provider TalkTalk makes sense, but a bolder deal would be for it to join forces with Virgin Media’s owner, Liberty, to pair mobile and cable assets across Europe.

Of course, all this activity is predicated on the coming of “quad play” – the idea that consumers are itching to buy their landline, broadband, pay-TV and mobile package all from the same supplier.

It sounds a great idea, and if these new corporate titans can tie up customers in this way, the chances are they will never leave. But look at the numbers from Virgin Media, Britain’s first quad player: after eight years, only 17 per cent of its customers buy all four services from the business.

That is academic for Sharon White, newly announced as the next chief of the telecoms regulator Ofcom, for whom life amid all these takeovers will get very interesting.

How to cultivate a business contact: work at Christmas

An old friend was rejoicing over how well a foreign contract was going when I met him for a Christmas drink this week. The reason the relationship had got off to such a good start a year ago is that, bored of spending time with his family on Christmas Day, he was idly scrolling through messages on his smartphone and responded to an email from the client.

With a work ethic like that on the laziest afternoon of the year, they couldn’t refuse.

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