Takafumi Horie, 32, founder and CEO of JPY 30 billion Internet service
provider Livedoor Co., Ltd., has recently started buying into Nippon Broadcasting
System, Inc. to acquire a controlling share in the broadcaster. NBS is
the parent of flagship entities of the Fuji-Sankei Group such as Fuji TV
Network Inc. As of today Horie could acquire more than
40% of the outstanding voting shares of NBS, raising the necessary funds
by having Lehman Brothers underwrite JPY 80 billion-worth convertible bonds
with a "Moving Strike" clause. Horie has made it clear by now
that his ultimate goal in seeking a majority stake in NBS is to form a
broad business alliance with the Fuji-Sankei Group on an equal footing.
Horie has been doing all this in an absolutely legitimate way in the light of the current Securities Exchange Law. Also he looks to have studied very carefully all the implications of the Broadcast Law which stipulates that a broadcaster's license should be revoked if 20% or more of its outstanding voting shares are acquired by foreign investors. At present the law doesn't prohibit indirect foreign control of a Japanese broadcaster. So he could make sure it wouldn't constitute a violation of any law if he went ahead with his bid for NBS in which Lehman Brothers would most probably convert all the CBs it underwrote into stocks of Livedoor.
If there are some flaws in his plan that make him vulnerable to counter-attacks, it's the fact that he sneakily used the early morning premarket of the Tokyo Stock Exchange's MOTHERS
(Market of the High-growth and Emerging Stocks) section, which is an unusual and unprecedented way of launching a hostile takeover bid (TOB), a method commonly used outside of Japan when trying to control a company without prior consent from the target.
Law-abiding as Horie may have looked, the Fuji-Sankei Group was totally unprepared when the aggressive and shrewd entrepreneur put his plan in motion earlier this month. Back on January 17 Fuji TV Network had announced it was planning to carry out a tender to make NBS a subsidiary by increasing its stake in the parent broadcaster from 12.39%, as it stood then, to something more than 50%. But now, to counter the Horie's takeover bid, Fuji TV Network announced a more realistic plan in which it was extending the target date for the offer from February 21 to March 2, while lowering the target level of the shareholding from 51% to 25%. The current Commercial Code provides that if a subsidiary acquires a 25% or more stake in its parent, the parent is not allowed to exercise voting rights through its majority stake in the subsidiary. So the plan revised on the part of Fuji TV Network seems to indicate that the Fuji-Sankei media group is now prepared for losing NBS to Horie in the interest of the entire group.
Aside from its bidding battle against Livedoor, it has also launched a verbal counter-attack against the Horie's swift and merciless move to subvert the media's behemoth alias government's lapdog. Other media empires, perhaps with an exception of the Asahi Group, as well as the government, have all aligned themselves behind the Fuji-Sankei Group. But just the same, the Fuji-Sankei Group was caught so off-guard by the aggressive and shrewd entrepreneur who takes nothing for granted, that they are having difficulty thwarting the Horie's attempt very plausibly. Makeshift and incoherent pretexts on which they base their criticism against the Horie's motive are all too far-fetched and far from convincing.
Basically the way they keep on criticizing Horie's attempt in chorus comes down to this:
- The way Horie has eyed a majority stake in NBS deviates from the traditional Japanese way of doing things in harmony, if it doesn't constitute a violation of laws.
- While the maverick emerging from the obscurity of the Internet world is just following the law of economy, as is often true with "Jewish or Anglo-Saxon ways" of conducting themselves, what is really at issue here is a sense of responsibility to serve the public interests.
On February 18 in its editorial, the Sankei Shimbun boasted that the flagship daily of the Fuji-Sankei Group adopted in 1970 a "seiron-rosen", or a principle upholding sound arguments without fear or favor, and that it has strictly adhered to this principle ever since. In reality, however, the media group has, time and again, failed to live up to its own lofty mission statement in the last 35 years. As I discussed in the Nov. 25 TFP story titled "Compliance with someone else's moral standards is far from enough," the Fuji-Sankei Group has made an unparalleled contribution to the ongoing moral erosion in this nation by catering to the most vulgar facets of our society. When it comes to where it positions itself in terms of international politics, the Sankei Shimbun has been known for its anti-Beijing and anti-Pyongyang editorial views as well as news selection/placement criteria along those lines just becasue of this self-labeled seiron rosen. But it's an open secret now that the "right-leaning" newspaper has recently started subtly toadying Beijing. if not Pyongyang, in deference to the local business circles which have increasingly become overt in expressing their big appetite toward the world's most populous consumer market and one of the world's cheapest labor markets.
In the meantime weekly magazine "AERA" published by the "left-leaning" Asahi Shimbun last week featured the controversial figure, rather favorably, in its cover story. It quoted outspoken Horie as making nasty remarks about the media group he is targeting. In essence he said: "Giving serious analyses or opinions does not really become that group. It will be much better off if it focuses solely on entertainment because show business and sports are its only forte. It won't make the slightest difference (to this society) in the first place if the Sankei Shimbun, or any other printed media, keeps preaching lofty ideas or rewrites school textbooks (of history) with a lot of fanfare."
Now it seems unrealistic to expect Horie to transform the rotten empire into a group of more decent media organizations with a minimum amount of analytical ability and courage with which to tell the truth "without fear or favor" to their readership and audience. Judging from his remarks on various occasions, the most we can possibly expect from him is to somehow transform the landscape of the Japanese media, perhaps in a matter of a decade, through the pursuit of convergence between conventional media and Web-based interactive media. But at least it will be one important step forward if Horie finally succeeds in securing a controlling stake in NBS.
On Sunday, February 20, the chieftain of Livedoor was literally doing TV station-hopping all day long. Channel 8 (Fuji TV) was the only TV station on which he didn't appear. But the very next day, not a single major newspaper printed this nasty name, Takafumi Horie, as if holding their breath out of fear of the scary figure. If asked, editors' answer might have been: "We are just refraining from possibly talking NBS's stock price and Livedoor's up or down." But in fact they were just trying to distance themselves from this particular case as much as possible, fretting over how to defend themselves in the future from possible attacks by corporate raiders such as the 32-year-old reckless rascal.