Sony → Columbia Pictures
Sony's $3.4bn cash purchase of Columbia Pictures Entertainment in 1989 was the first time a Japanese company had bought a major Hollywood studio; the bet on films as "software" for Sony's hardware was followed by a $2.7bn write-off five years later, yet the studio became today's Sony Pictures.
The high-water mark of Japanese acquisition in the United States, and the start of Sony Pictures.
- Value
- $3.4B
- Announced
- September 1989
- Completed
- November 1989
- Sector
- Media
- Deal type
- acquisition
- Acquirer
- Sony (Japan)
- Target
- Columbia Pictures (United States)
Why it mattered
Under Norio Ohga, Sony had bought CBS Records for $2bn in 1988 and wanted films and television programmes to feed its video recorders and new formats — building a total entertainment business around hardware and software together. Columbia Pictures Entertainment, which held the Columbia and TriStar studios, a large film and television library and the 820-screen Loews cinema chain, was 49% owned by Coca-Cola, which had bought Columbia in 1982 and floated part of it in 1987.
Columbia's board agreed on 27 September 1989 to sell for $27 a share in cash — the largest US acquisition by a Japanese company to that date — and Coca-Cola gave Sony an option on its stake, a sale worth about $1.5bn to it before tax. Sony also paid $200m for Guber-Peters Entertainment to install Peter Guber and Jon Peters as co-chairmen. The pair were under contract to Warner Bros, and Time Warner's Steve Ross threatened to sue; Sony settled by selling Warner half of Columbia House and cable rights to Columbia films, and by swapping studio property. Sony completed the takeover on 8 November 1989; including $1.4bn of debt it cost $4.9bn.
What it left behind
Columbia Pictures Entertainment was renamed Sony Pictures Entertainment in 1991. Early big-budget releases such as "Hook" were followed by a run of failures, Peters left in 1991 and Guber in 1994, and in November 1994 Sony took a $2.7bn write-off on the studio on top of a $510m operating loss — an admission, one Tokyo analyst said, that the investment had failed. Sony kept the studio and has since added Crunchyroll, bought from AT&T in 2021, the Alamo Drafthouse cinema chain in 2024 and, with Sony Music Entertainment Japan, control of Peanuts in 2026, while a $26bn offer for Paramount with Apollo in 2024 was dropped. The write-off showed how badly the price and the management arrangements had been judged; the studio and its library outlasted both, which is the difference between overpaying for an asset and buying the wrong one.