Dan Loeb accuses Sony of treating entertainment arm like 'red-headed stepchild' In an open letter, he said Sony had treated the division "like its red-headed stepchild" and compared its recently released blockbusters to Waterworld and Ishtar, the notorious box office flops. He also alleged that its culture is "characterised by a complete lack of accountability and poor financial controls." Mr Loeb, whose Third Point fund owns around 7pc of Sony, has been pressurising Sony chief executive Kazuo Hirai to list the entertainment division in New York, claiming that the company is undervalued because investors do not understand Sony's diverse business - which is made up of electronics, entertainment and financial services divisions. In the letter, Mr Loeb said that Sony Entertainment's profitability is well below its competitors despite the division generating superior revenues. He singled out Mr Hirai, who has said Entertainment is "doing just fine," but also criticised a general culture at the business. "Unlike Electronics, Entertainment remains poorly managed, with a famously bloated corporate structure, generous perk packages, high salaries for underperforming senior executives, and marketing budgets that do not seem to be in line with any sense of return on capital invested," he wrote. He also compared Sony Pictures' summer releases After Earth and White House Down, which saw lukewarm receptions at the box office, to Waterworld - the 1995 flop starring Kevin Costner, which at the time was the most expensive film ever made - and 1987's Ishtar. "We find it perplexing that Mr Hirai does not worry about a division that has just released 2013"s versions of Waterworld and Ishtar back-to-back, instead giving free passes to Sony Pictures Entertainment Co-CEO's Michael Lynton and Amy Pascal, the executives responsible for these debacles," he wrote. To us, these latest blunders are prima facie evidence of our thesis that Entertainment's US-based business is being ineffectively overseen and needs its own governance structure led by a board whose job it will be to worry about such troubling results. Mr Loeb urged Sony to spin off Entertainment - which includes the Hollywood film studio behind Skyfall and one of the world's biggest music labels - in May. Sony said last month that it would consider the move but it would not be a quick sale. Despite his criticism of the entertainment arm, Mr Loeb praised Mr Hirai for his work in turning round Sony's electronics division since he took over as chief executive from Sir Howard Stringer last year. He said Sony had made great strides in games consoles and smartphones - where it has overtaken Apple in Japan. Full letter below