Jan 31, 2017 06:31 AM EST

Sony’s Writes Down Movie Business By $1 Billion

TAG:Sony, Movie

The value of Sony's movie business is going to suffer a writedown of $1 billion. This is reportedly due to an accelerating decline in the market.

The movie business of Sony has taken a hit as a market decline takes place, reports BBC. It will result in the entertainment company to write down a value of 112 billion yen or roughly $1 billion.

Sony revealed in a statement that the group had to reduce costs as well as cut its outlook earnings for the traditional forms of media streaming such as Blu-ray discs and DVDs due to the fact that the latter's sales are declining as online streaming dominates the market of television and film. An improvement in the profits of the pictures division is expected to be a result of the changes made, reports Reuters.

In addition, Jefferies analyst believed that this is a reflection of past mistakes rather than of newer issues. The news site added that almost all of the write-down made by Sony involved the goodwill that was recorded back in 1989 when Sony acquired Columbia Pictures.

The shares of Sony fell, however, post announcement. According to Reuters, shares dropped 4 percent before recovering and it was approximately 2 percent at 0430 GMT.

The company plans to sell its shares in M3 Inc, a medical web service, in an attempt to offset the impact of the write-down. As a result, the entertainment company will find its holdings reduced from 39.3 percent to 34 percent.

In other news, Michael Lynton, the Chief Executive for Sony Entertainment, announced two weeks ago that he is stepping down in February after more than ten years in the firm to become the chairman of Snap Inc, owner of the famous app called Snapchat. A period of six months will be given to help find a suitable successor to Lyton.

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