Fuji TV resists Livedoor’s attempt to acquire Nippon Broadcasting

Annie Tao recaps the ongoing battle between the Fuji Sankei companies, a battle that is becoming more complicated as outside shareholders and the courts get involved

By Annie Tao
AsiaMedia Staff Writer

Monday, March 7, 2005

The high profile acquisition battle between Livedoor Co. and Fuji TV began on Monday, February 21, when Livedoor announced that it was Nippon Broadcasting System Inc.’s largest shareholder, holding a stake of over 40 percent of voting rights.

Livedoor bought the majority of the NBS shares during off-hours trading.

All the companies are members of the Fuji Sankei media group. Livedoor, an internet company, intends to gain clout over network Fuji TV by becoming radio broadcaster Nippon Broadcasting’s largest stakeholder.

Nippon Broadcasting has long been Fuji TV’s primary stakeholder, dominating by holding 22.5 percent of voting rights. If Livedoor is able to make Nippon Broadcasting a subsidiary, it will also be able to make its presence felt in the management of Fuji TV.

Speculators say that Livedoor President Takafumi Horie’s ultimate goal is to become the governing power within Fuji Sankei. The internet company could then make use of radio, television, and even a record label, all of which are currently operated under the Fuji Sankei media conglomerate.

To thwart Livedoor’s plans, Nippon Broadcasting has issued 47.2 million new shares, exclusively for Fuji TV to purchase. President Akinobu Kamebuchi explained the company’s action saying in a press conference, “If Livedoor becomes our parent, our corporate value will be gravely damaged."

Fuji TV has until late June to purchase all the shares. This would dilute Livedoor’s stake to 16 percent and boost Fuji TV’s holdings to 40 percent. 

To contest this new turn of events, Livedoor took legal action. The internet company plans to argue in court that being the current majority stakeholder in Nippon Broadcasting gives it the right to veto such an action. Experts give the upper-hand to Livedoor, citing that blocking a takeover is not a good enough reason to issue millions of new shares.

Major utility companies have also stepped up to counter Livedoor’s attempt to oust Fuji TV.  Tokyo Electric Power Co., Kodansha Ltd., Mitsubishi Electric Corp., and Kansai Electric Power Co. have all sold their shares to Fuji TV, saying that they wished to maintain good business relationships with Fuji Sankei.

Daiwa Securities SMBC Co. has also agreed to sell its shares of Nippon Broadcasting to Fuji TV.  Holding the largest stake out of all of the aiding outside companies, Daiwa Securities SMBC Co. owns 2.63 million shares, which would add 8 percent to Fuji TV’s stake.

At this point in time, Fuji TV’s main goal is to obtain over 25 percent of Nippon Broadcasting by March 7. Over 25 percent would prevent Livedoor from indirectly controlling Fuji TV because Nippon Broadcasting would not be able to exercise its voting rights on Fuji TV.

In the most recent development, Livedoor has acquired more shares of Nippon Broadcasting, thus increasing its stakehold to over 45 percent.

Date Posted: 3/7/2005