SONY has kicked off its annual shareholders' meeting with markets waiting to see how the struggling Japanese giant will address a proposal to spin off a piece of its profitable entertainment arm. Billionaire US hedge fund investor Daniel Loeb has proposed hiving off up to 20 per cent of the division, which includes a music label and Hollywood movie studio, outlining his plan in two hand-delivered letters to Sony chief Kazuo Hirai. Loeb - an outspoken investor with a reputation for pushing change at the companies he targets - has suggested Hirai serve as head of the board of the new business, while retaining his spot at the helm of the overall group. Loeb argued that spinning off the entertainment division would make managers more accountable and help improve profitability at one of Sony's key moneymakers. He also offered his service on Sony's board, saying that his firm Third Point had amassed a stake in Sony that made it the Japanese firm's single biggest investor. Analysts said Loeb's soft-touch approach appeared to mark a dramatic shift from previous, mostly unsuccessful, forays by foreign investors who tried to force change at Japanese firms. Shareholder activism in Japan is not firmly entrenched like it is in Europe and the United States. Sony responded to Loeb's first letter last month by saying it would continue "constructive dialogue with our shareholders as we pursue our strategy." But, it added, the "entertainment businesses are important contributors to Sony's growth and are not for sale." Hirai has resisted previous calls to break up the electronics behemoth which has struggled for years as it bled money from its television unit and other consumer gadgets. The maker of Bravia televisions and PlayStation game consoles has limped back to an annual profit after four years in the red, mostly due to the weak yen and selling assets including Sony's Manhattan headquarters. Sony's Tokyo-listed shares were up 0.54 per cent to 2,025 yen in morning trading on Thursday.