DealBook: Sony Rejects Loeb Proposal for Splitting Off Entertainment Unit

DealBook: Sony Pondering Spinoff Proposal From a Big Investor

Kimimasa Mayama/European Pressphoto AgencyKazuo Hirai, chief of Sony, at a corporate strategy presentation in Tokyo on Wednesday.

TOKYO — Sony said on Wednesday that its board was considering a proposal from the hedge fund Third Point to spin off part of its entertainment business, but it emphasized that the discussions were preliminary and that it had not set a time to respond.

Sony, under pressure from Third Point, one of its top investors, to unlock more value from its lucrative entertainment divisions, also said it was on track to return its electronics business to profitability this year.

“We will engage in thorough discussions at the board level to decide on Sony’s response,” Kazuo Hirai, the chief executive, said in response to questions at a corporate strategy presentation. “It is an important matter that relates to Sony’s core businesses and management, so the board must hold ample discussions.”

Mr. Hirai said board members were already discussing the proposal, though some of them will be replaced after Sony’s annual investor meeting in June. He declined to say when Sony might respond or to give his views on the proposal, saying the matter was for the board to judge.

“We are still in early stages,” Mr. Hirai said. “But we intend to engage positively with our investors.”

Phil McCarten/ReutersDaniel S. Loeb of Third Point.

It is unclear whether Sony will seriously consider the proposal from Third Point’s manager, Daniel S. Loeb, who is pressing the company to spin off part of its entertainment arm, which includes one of the biggest film studios in Hollywood and one of the largest music labels in the world.

Corporations in Japan, including Sony, have a history of ignoring letters from shareholders calling for overhauls, a former top investor in Sony said.

Mr. Loeb’s hedge fund has acquired roughly a 6.5 percent stake in Sony, making it one of the biggest shareholders. In a letter that was made public, he has proposed that Sony use the money raised from a spinoff to reinvest in its ailing electronics business.

Mr. Hirai, who became chief executive in April 2012, emphasized that even without such a move, Sony was on track to bring its electronics business back into profitability this fiscal year, which runs through next March.

He said Sony still expected sales of 6 trillion yen ($58.3 billion) from electronics and an overall 5 percent operating profit margin, adding that the company hoped its televisions would turn a profit for the first time in a decade.

“The No. 1 mission assigned to me is to bring change to Sony and to revive our electronics business,” Mr. Hirai said. “We are on the offensive.”

French Tax Proposal Tackles Data Harvest by Google and Facebook

PARIS — When it comes to taxes, the French are pioneers. In 1954, they introduced the world’s first value-added tax. Since then, they have proposed or championed duties on all manner of other things, like online advertising, pollution, financial transactions and vacation homes.

Only a few weeks after the French Supreme Court rejected one new tax proposal — a 75 percent levy on incomes of more than €1 million, or $1.3 million, a year — an even more novel idea began percolating through the halls of the finance ministry last month: a proposal to tax the collection of personal data on the Internet.

Google and Facebook know that John Doe “likes” wine, is shopping for a Volkswagen and often e-mails Jane Doe. Soon, they might have to pay for gathering that information.

Does France really need another tax? As of 2009, French tax revenue was equivalent to 42 percent of gross domestic product, one of the highest burdens in the world, according to the Organization for Economic Cooperation and Development, the coalition of free-market democracies. The U.S. figure was 24 percent.

But Nicolas Colin, one of the authors of a report in which the idea of taxing data collection was floated in January, insists that the proposal serves an important purpose. Like other European countries, France has been frustrated by its inability to raise significant tax revenue from the billions of dollars worth of sales and profits that Internet companies, many of them American, generate in Europe every year. Meanwhile, despite so-called austerity measures, budget deficits remain large.

“Every government needs revenues,” Mr. Colin, a government auditor and technology entrepreneur, said in an interview. “If they can’t get them from the most profitable companies, then they have to get them from the rest of us — individual taxpayers and smaller, struggling companies.”

Internet companies like Amazon.com, Facebook and Google, along with a number of other multinationals, stay largely out of reach of tax collectors in large European countries like Britain, France and Germany by routing their sales through smaller countries, like Ireland and Luxembourg, where corporate tax rates are lower. The companies insist that such practices are permitted under E.U. law and international taxation treaties.

France and other countries have initiated talks aimed at changing those conventions, so Internet companies could be taxed in the country where a sale takes place, rather than in the location where the transaction is recorded. But that could take many years, with no guarantee of any change.

France, on the other hand, could impose a tax on data collection unilaterally and quickly, Mr. Colin said. Yet the prospects for his proposal are unclear. While the report was commissioned by the government, it is not an official policy document, and the finance ministry has yet to take a position on the idea.

On other issues involving the digital economy, the administration of President François Hollande has sent mixed signals. After threatening Google with a law that would have authorized publishers to charge the search engine for links to their Web sites, for example, the government backed down and accepted a negotiated deal that maintains Google’s existing business model, under which links are free.

The French data protection agency — which is known by its French initials, C.N.I.L. and is independent from the government — has been more forthcoming about the taxation proposal.

“Personal data are the fuel of the digital economy,” Edouard Geffray, secretary-general of C.N.I.L., told the French version of the online magazine Slate. “Given that, it would seem like a natural idea to envision taxing the use of them.”

While business models built on the promise of “Big Data” are proliferating, with established giants like Google and Facebook and a growing number of startups hoping to mine ever more detailed personal information to sell advertising or other services, so are concerns about the use of those data.