12, 05. 2005
Of the five TV stations-Fuji Television Network, Inc. (Fuji TV), Tokyo Broadcasting System Inc. (TBS), Nippon Television Network Corporation, TV Asahi Corporation and TV Tokyo Corporation-that serve the Kanto region centered on Tokyo, two have recently been targeted for acquisition by internet companies. Fuji TV has attracted the interest of Livedoor Inc., and now online retailing giant Rakuten Inc. has become the largest shareholder in TBS. What makes TV stations such attractive take-over targets for Japan's IT companies?
Livedoor and Rakuten once attempted to take over TV stations. Two IT firms are both located in Roppongi Hills, one of the Tokyo's new landmarks.
Rakuten initially acquired a 15% stake in TBS. On October 13, it proposed management integration with TBS through establishment of a joint holding company, and raised its stake to 19%.
Rakuten was founded by its current president Hiroshi Mikitani in 1997. Listed on JASDAQ in 2000, it expanded into finance, travel and other businesses through aggressive corporate takeovers. In 2004, Mikitani became the owner of the J-League soccer team Vissel Kobe and founded the professional baseball team Tohoku Rakuten Golden Eagles. For the term ended December 2004, the company reported sales of 45.5 billion yen and an operating profit of 15.0 billion yen. Its market value as of October 14 was 1,039 billion yen. Total assets stand at 1,296.9 billion yen, and it has 960 employees.
Small Fry Are Eating Up the Big Fish
TBS was established in 1951 as a private broadcaster centered on Tokyo, with a TV and radio network of 28 other stations around Japan. It also produces and markets video software, operates a real-estate business, and owns the professional baseball team Yokohama BayStars. For the term ended March 2005, the company reported sales of 301.7 billion yen and operating profit of 22.5 billion yen. Its market value as of October 14 was 270 billion yen and it has 2,988 employees.
In terms of sales, Rakuten is only a fraction of the size of TBS, so why then has it targeted TBS for takeover? The answer can be found in the written proposal for operational merger that Rakuten made to TBS. It cited three areas of mutual benefit from a merger: 1) online airing of TBS dramas such as 'Shouting Love in the Centre of the World (Sekai no Chushin de Ai wo Sakebu) and news shows; 2) marketing of DVD software combined with Rakuten's internet services and of tickets for entertainment events; and 3) increased revenues from TV advertising through internet linkage, and online promotion of TBS programming.
TBS questioned the feasibility of Rakuten's proposals, pointing out that it would be no straightforward matter airing programming over the internet due to copyright issues, involving actors, screenwriters, musicians and other parties, that would first have to be dealt with in turn. It added that nothing specific had been proposed regarding combined TV and internet advertising.
IT Companies are After Broadcasters' Content
The 70-day tussle between Livedoor and Fuji TV in 2005 was one example of an internet company trying to get access to the programming and other content owned by a broadcaster. Livedoor tried to gain control over Fuji TV by becoming the main shareholder in its parent Nippon Broadcasting System, Inc. Livedoor and Fuji TV finally reached settlement by forming a capital and operational tie-up.
Livedoor President Takafumi Horie had aimed for a 'fusion of the internet and conventional media' in which Fuji TV and Nippon Broadcasting System's visual and musical content (programming) would be distributed via the internet and other broadband media.
Clearly, IT companies have been trying to take control of broadcasters for their content. The pattern began in the United States, a leader in internet business and technology. AOL, Inc. and the multimedia giant Time Warner Inc. merged in January 2001. The idea was to air made-for-TV movies, regular movies, music and other content owned by the former Time Warner over the internet using AOL services.
TV Companies Go Online Independently
But much time was taken up in sorting out copyright issues surrounding popular TV dramas and movies, and not enough programs could be secured for internet transmission. News from CNN and articles from Time magazine, both of which companies which are owned by the Time Warner group, were distributed to subscribers as a paid-for service, but the availability of free news on the internet thwarted this venture. Likewise, Livedoor was only able to achieve limited results after its tie-up with and Fuji TV, such as online sales of tickets for jointly sponsored events through its website.
The targeting of Fuji TV and TBS by IT companies has prompted broadcasters to distribute their programming content over the internet independently. They feared that the IT sector might otherwise dictate the pace of growth of online program transmission.
Nippon Television Network launched a paid-for internet TV broadcasting service on October 28. Titled Daini Nippon Terebi (Nippon Television No. 2), it offers news and variety programming for a charge ranging from 9 yen to 99 yen per show. TBS joined suit on November 1, while Fuji TV has been distributing sports and other programs over the internet since July. TV Asahi is trialling a paid-for service, and TV Tokyo also seems bullish about developing this business, having launched an anime distribution service.
How will IT companies fare in the future in their efforts to buy into the TV business? We should have a better idea when the ongoing struggle between Rakuten and TBS is settled.
