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Japan media landscape restructuring

Japan’s broadcasting is a US$ 40 billion/year industry

There have been many attempts over the years for Japan media landscape restructuring

by Gerhard Fasol

Japan’s broadcasting markets (commercial TV + NHK + CATV + satellite + AM & FM radio) have annual combined revenues on the order of US$ 40 billion. The main players in this market are five large commercial TV groups and the semi-public NHK.

Media Group TBS attracts uninvited merger proposals

One of these five TV and media groups – TBS – has received an uninvited merger proposal by it’s largest shareholder – the internet portal Rakuten – and in parallel also attracted the Murakami-Fund as an investor.

TBS media group under pressure? and why?

Earlier this year Japan’s Murakami Fund acquired about 7% of the TBS Media Group, and declared that TBS was undervalued and should sell non-core assets, such as real estate and other non-TV / non-media related properties.

Recently, Rakuten acquired about over 20% of TBS shares, making Rakuten the largest shareholder of TBS. Rakuten announced a business plan for a merged Rakuten-TBS Group integrating Rakuten’s internet businesses with TBS’ TV and media operations. Since Rakuten’s stock market valuation is about 35% higher than TBS’ valuation (as of October 24, 2005), Rakuten’s management is expected to dominate a potentially merged group.

TBS’ management is not delighted with the prospect of losing control in this way. In response, three things happened:

  1. TBS management announced cooperations with “stable shareholders” Dentsu, Mitsui Bussan, and Bic-Camera, and non-shareholder, and other Japanese corporations.
  2. The Murakami Fund proposed a management buy-out, which would lead to a delisting of TBS by the Tokyo Stock Exchange, taking TBS private. This possibility was voted down by TBS management.
  3. Livedoor offered support as a (very unlikely) white knight. Given Livedoor’s record of a failed hostile take-over attempt of the Fuji-Sankei media group earlier this year (for details see our report on Japan’s Media industry), it seems to be more than unlikely for TBS to go for Livedoor as a white knight – however no one knows for sure.

At this time the acquisition battle for the TBS Group is in full swing and the final outcome is difficult to estimate. In parallel to the take-over battle, a public discusson by Japan’s industry leaders is examining the desirability of hostile take-overs in Japan.

Japan media analysis report:

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