What exactly is Fuji-Sankei Group talking about when it says: "Our lofty mission to serve public interest"?
Contributed by: Y.Yamamoto
This is to follow up the February 21 TFP story titled "Takafumi Horie launches assault on right media empire."
The "bidding battle" over control of Nippon Broadcasting System between, Fuji TV Network, flagship entity in the Japan's biggest Fuji-Sankei media empire, and Livedoor, JPY 30 billion Internet service provider, took a new twist on Wednesday. NBS announced its board of directors had decided to issue new voting shares on March 24 and give Fuji TV exclusive warrant rights to subscribe these shares in what American securities experts call the "poison pill tactic." The board resolution was announced at a press conference by NBS President Akinobu Kamebuchi. But since in a "convoluted", and often collusive, shareholding structure particular to Japan, the broadcaster is a nominal parent and virtual subsidiary of Fuji TV, the resolution was also a nominal one just to formalize the decision taken on the part of Fuji TV to resort to the poison pill tactic to counter Livedoor's bid for a controlling stake in NBS.
More specifically Fuji TV decided to have NBS issue stock warrants for 47.2 million new shares to be exercised exclusively by the TV network between March 25 and June 24 at a preferential price of JPY 5,950 per share. Since the number of the NBS's outstanding shares stands at 32.8 million at present, the warrant rights will dilute overall shareholders' stakes by more than half when Fuji TV exercises them.
Until the surprise announcement by Kamebuchi, Livedoor's founder and CEO Takafumi Horie by far outsmarted Fuji TV and could acquire a 40% stake in NBS that compares to Fuji's 25%. But now it looks as though Fuji TV has turned the tables on Livedoor. If and when the warrants are fully converted into new shares by Fuji TV, Livedoor's stake will come down to about 16% while Fuji's stake will jump to the neighborhood of 70%.
In its last-ditch effort to counter Horie's attempt to raid NBS, the media group has now revealed its colors. The new move not only violates the governing laws but also involves blatant injustice in many ways. Just to mention a few:
- The resolution at the NBS's board of directors meeting has not yet been approved by a general shareholders meeting despite the fact that the poison pill Fuji TV is going to administer to Horie will inflict undue damages on other stock holders, as well, with the intended dilution of shareholders' stakes.
- From investors' point of view the special price predetermined for Fuji TV at JPY 5,950 is outrageously unfair. (NBS stock price closed at JPY 6,280 on the Tokyo Stock Exchange Thursday.)
- Equally important, Article 280 of the Commercial Code prohibits a company from issuing new stocks where there are no specific business needs to be accommodated through equity financing. An added capitalization just to thwart an outsider's attempt to acquire a controlling stake is a downright violation of this stipulation. NBS President Kamebuchi was stressing at the Wednesday press conference that there is an impending need for a capital increase to finance planned studio renovations, etc. But nobody believed him because it was so transparent that the president had been told by his boss at Fuji TV to tell a lie before the press.
Another way to describe how shamelessly these media bandits have been conducting themselves will be like this: In Stage 1 of the bidding battle, Fuji-Sankei media group was on the defensive. All the media behemoth could do to counter the Horie's swift and merciless raid attempt was to accuse him of violating imaginary "laws" which were yet to be written. In Stage 2 that started Wednesday, it's now Fuji's turn to violate laws - actual laws, this time, which have already been enacted.
While Horie quickly filed a lawsuit late Thursday night with the Tokyo District Court for a provisional injunction under the Commercial Code and the Securities Exchange Law, a growing number of observers under the influence of Fuji TV, the Sankei Shimbun daily of the group and its de facto evening edition Yukan Fuji are now saying it's improbable for the maverick media raider to be able to reverse the tide and ultimately succeed in his pursuit of a "business alliance" with the media giant. They are confident about their own prediction despite the legal vulnerability involved in the Fuji's scheme simply because the government and the entire financial bureaucracy have now aligned themselves behind the media group. Besides the group is much more deep-pocketed than Livedoor.
But the TokyoFreePress views the situation quite differently: Horie's Livedoor is going to win the battle. Actually he has already won it, if unwittingly, because he could unmask the evil media empire when he revealed the weapon the villain was carrying was fake.
Since the beginning of the battle, the Sankei Shimbun has repeatedly editorialized the Fuji's case against Horie, stressing the almightiness of the weapon called media's lofty mission to serve the public interest, which it says is beyond comprehension of the youngish lone wolf whose only concern is the money to be earned through a "new business model" capitalizing on synergy from convergence between conventional media and web-based interactive media. The Yukan Fuji has been echoing the parent's voices every evening. This way they are trying to insinuate that the media organizations are given a certain prerogative with which to avert possible raid attempts by outsiders.
If you, like Horie, have difficulty understanding what exactly they are talking about when they say, "our lofty mission which separates us from ordinary businesses," the two filthy clips from Feb. 24 issue of the Yukan Fuji, embedded at the top of this article, will give you some idea. As usual the Yukan Fuji was promoting dozens of disguised whorehouses predominantly run by the yakuza and sex slaves being abused there. In the very same edition, the Yukan Fuji was triumphantly ridiculing and slandering the CEO of Livedoor as the loser, without knowing that made him the winner, instead. Incidentally the TokyoFreePress has nothing, whatsoever, against sexual explicitness. It only finds it totally unacceptable for the mainstream media to promote prostitution which is pervasive across the nation in its highly institutionalized and subtly legitimatized form.
Aside from promoting prostitution, there are some other facets in this lofty mission. Obviously they are responsible for guiding their readership and audience toward a deformed capitalism where shareholders are supposed to serve the interest of the company management, rather than the other way around. They are also leading this nation in the direction of a democracy without press freedom, where the exclusive rights for the media to lie are substituted for everyone else's freedom of speech. ·