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Sony Still Bets on Gizmos, Not Mergers

November 03, 2000|CLAUDIA ELLER and SALLIE HOFMEISTER

In the New York/Hollywood media world, few executives are wittier or more charming than Howard--make that Sir Howard--Stringer, chairman of Sony Corp. of America.

Three years into his stewardship, the affable, Oxford-educated Welshman is leaning heavily on his legendary personal skills as he struggles to turn the Japanese electronics and entertainment company from a perennial straggler into a media giant.

Stringer's power to make sweeping changes is limited by the corporate culture of the Toyko-based parent company.

A chronic window shopper in the ongoing merger frenzy that is fast-consolidating production and distribution, Sony increasingly has appeared to be a less and less important player. The recent three-way transatlantic hook-up of France's Vivendi, pay TV giant Canal Plus and Seagram puts Sony that much further behind its Hollywood rivals--Time Warner, News Corp., Viacom and Disney--in distributing via cable, Internet and broadcast outlets.

Recently knighted by Queen Elizabeth II, Stringer says that growing through mergers and acquisitions is yesterday's solution. From his Madison Avenue offices in New York, the 58-year-old executive oversees Sony's U.S. entertainment and electronics assets, which throw off $19 billion a year in revenue.

By delivering its movies, TV shows, music and games over its own electronic devices directly to consumers, Stringer says Sony can bypass--even leapfrog--the conventional distribution channels and stay ahead of the digital curve.

Sony's long-promised synergies between its gadgets and entertainment content are finally starting to click, he says, though realizing Sony Chairman and Chief Executive Nobuyuki Idei's vision of the "networked home" is still years off.

"While everybody else has been merging, we've been busily building up our digital inter-relationships," Stringer said in an interview this week at Sony's Columbia Pictures studio in Culver City. "We are the only company in the world that by nature can have the most devices in your home."

While many investors and analysts disagree, Stringer says that Sony, which held merger talks with parties including NBC and CBS, no longer needs a partner.

"Sony would probably have given up control of its content three years ago," said Stringer. "But, it isn't going to do that now because we keep thinking of new ways to deliver that content globally over all these different platforms."

But analysts question whether Sony's devices will be the ones that consumers gravitate to for ordering subscription services for movies, music, games and other entertainment. Sony's first PlayStation video game console is in the hands of 76 million customers worldwide--more than the collective subscriber base of all of the nation's cable operators. But new competitive devices--from cell phones to electronic personal organizers--are proliferating.

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The bumpy roll-out of Sony's newly unveiled PlayStation2, plagued by chip shortages, has cast a pall over the company's newest electronics superstar.

Stringer admits he stands on constantly shifting sands. Just a year ago, for instance, the fear was that Microsoft would migrate its operating system, dominant in the office, to the home. "That has sort of evaporated with the wind," he says, along with the notion that consumer electronics would all be controlled by the home PC.

Stringer's futuristic ambitions began to evolve well before Sony. After a 30-year career as a journalist, producer and top executive at CBS Inc., he resigned as president of the CBS Broadcast Group in 1995 to head a start-up of three Baby Bell telephone partners eager to enter interactive television. Ill-conceived and perhaps before its time, the venture died within a few years.

But Stringer was already a digital convert. Hired by Sony as the company's key strategist in the U.S., Stringer hoped to push convergence forward.

Yet his hands may ultimately be tied because of Sony's cultural passivity. In Japan, a consensus-seeking management style slows decision-making to a putter.

American executives at Sony also say the company is skittish about making any major acquisitions or investments that would jeopardize control over its content. Sony is not in the current round of discussions to buy DirecTV, the nation's leading satellite TV provider, because of that issue.

That leaves Stringer to function largely as Sony's interpreter and U.S. ambassador, hopping regularly from his Manhattan offices to corporate headquarters in Tokyo, as well as to Sony's European and Hollywood operations. Married to a dermatologist with two children under the age of 8, Stringer spends only one week out of three in New York, where he lives on the Upper East Side and is an avid collector of first-edition books.

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Over the last two years, Stringer has been focused on integrating Sony's hardware and software sides and building an infrastructure to support the digital convergence.

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