Earlier in the week, Daniel Loeb, the founder of the hedge fund Third Point, which controls 7 percent of Sony stock, wrote a letter to his investors chastising the company’s movie, TV, and music business. “We were surprised that after Entertainment’s highly touted big budget summer releases — After Earth and White House Down — bombed spectacularly at the box office, CEO [Kazuo] Hirai, speaking at the Allen & Co. Sun Valley conferences a few weeks ago, brushed off these failures saying: ‘I don’t worry about the Entertainment business, it’s doing just fine’.” Comparing those two films to Waterworld and Ishtar, Loeb said he didn’t understand why “the executives responsible for these debacles” were given “free passes.” Harsh words. Luckily, a knight in charming armor has emerged to defend Sony: George Clooney.
Clooney’s Smokehouse Pictures production company is housed at Sony and doesn’t appreciate “activist investor[s]” butting their noses into something they know nothing about. Talking to Deadline, Clooney went on a bit of a rant:
“I’ve been reading a lot about Daniel Loeb, a hedge fund guy who describes himself as an activist but who knows nothing about our business, and he is looking to take scalps at Sony because two movies in a row underperformed? When does the clock stop and start for him at Sony? Why didn’t he include Skyfall, the 007 movie that grossed a billion dollars, or Zero Dark Thirty or Django Unchained? And what about the rest of a year that includes Elysium, Captain Phillips, American Hustle and The Monuments Men? You can’t cherry pick a small time period and point to two films that didn’t do great. It makes me crazy. Fortunately, this business is run by people who understand that the movie business ebbs and flows and the good news is they are ignoring his calls to spin off the entertainment assets. How any hedge fund guy can call for responsibility is beyond me, because if you look at those guys, there is no conscience at work. It is a business that is only about creating wealth, where when they fail, they get bailed out and where nobody gets fired. A guy from a hedge fund entity is the single least qualified person to be making these kinds of judgments, and he is dangerous to our industry.”
Clooney feels Loeb is pushing for guarantees that movies will make money; however, Clooney argues: “There are no guarantees, but if you average out the films Will Smith and Channing Tatum have made, you will take that bet every time, even if sometimes it just doesn’t work out.”
Clooney’s fear is that the movies he likes to make — Argo, the upcoming Monuments Men, and other medium-budget medium- to highbrow films — have no place in this idea of Hollywood and that Loeb is “trying to spread a climate of fear that pushes studios to want to make only tent poles.” Adding, “You want to see what happens if outside forces start to scare the industry and studios just make tent poles out of fear? You will see a lot of crap coming out.”