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Mar 18, 2005

Japan's Livedoor got Fuji TV stock for bargain

TOKYO - Livedoor Co is poised to obtain management control of Nippon Broadcasting System Inc, a move that brings with it a major financial benefit.

Nippon Broadcasting owns 570,000 Fuji Television Network Inc) shares, which carry a market value of nearly 145.1 billion yen (US$1.4 billion). Because Livedoor is estimated to have spent only about 100 billion yen to obtain a majority stake in Nippon Broadcasting on a voting rights basis, this means that the Web portal operator effectively acquired the Fuji TV stock for just 100 billion yen.

Fuji TV's share price rose 10% on the day Wednesday, translating to an increase in asset value for Livedoor as well. Ironically, the stock price jump was the result of the television broadcaster's plans for a sharp increase in its dividend payout to fend off a takeover by Livedoor.

As a show of resistance, Nippon Broadcasting could sell its Fuji TV shares. But in such an event, the radio broadcaster would incur a tax burden of tens of billions of yen.

Fuji TV had originally planned to transform Nippon Broadcasting into a subsidiary in order to avoid situations like the one involving Livedoor.

"We have been criticized for not winding down (the complex capital ties) earlier, but companies have history and a culture, so changes are not simple," Fuji TV Chairman Hisashi Hieda told a March 8 news conference.

But Livedoor was not willing to wait and decided to act when both Fuji TV and Nippon Broadcasting least expected it.

(Asia Pulse/Nikkei)

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