Horie's bid comes to an end in anticlimax, whatever it was all about

Tuesday, April 19 2005 @ 07:18 AM JST

Contributed by: Y.Yamamoto

When Takafumi Horie, founder and CEO of Internet service company Livedoor, launched in early February a hostile takeover bid for Nippon Broadcasting System, AM-radio broadcaster within the Fuji-Sankei media group, we thought the 32-year-old maverick was going to make some difference to the media landscape here. (See Feb. 21 and Feb. 24 TFP stories.) At the initial stage, the CEO of Livedoor blatantly assaulted the seiron rosen (see above links) upheld by the printed media arms of the Fuji-Sankei group, such as the Sankei Shimbun. Horie looked to know very well this hypocritical editorial policy is the most vulnerable and weakest spot of the media group. In February, weekly magazine "AERA" published by the left-leaning Asahi Shimbun quoted him as saying "Sankei shimbun nanka ga ikura waa-waa waa-waa ittari, kyokasho wo kakinaoshitari shitemo yononaka chittomo kawarimasen yo." This casual remark quoted here is roughly translated like this: "No matter how ardently the likes of the Sankei daily preach their nationalist cause through their loudspeakers, or no matter how many times (Sankei-affiliated publisher Fuso-sha) revises the (junior-high history) textbooks, that won't make the slightest difference to the society."

However, no sooner could Horie successfully secure a majority stake in NBS, in terms of voting right, than he toned down his attacks against the media group at its Acchilles' heel. And consequently we have quickly lost interest in the whole "bidding battle" launched by the maverick corporate raider against the media behemoth because it now became apparent that his harsh criticism against the seiron rosen had been nothing but a pretext on which to pick the fight.

The sudden cease-fire was brought about soon after Horie secured a majority stake in the AM-radio broadcaster in part because of the signs that the Fuji-Sankei group would desperately resort to foul plays such as "Pac-Man defense," securities analysts' jargon to refer to a counter-takeover attempt, or "scorched earth tactic" which actually meant the likelihood that Fuji TV Network, virtual parent of NBS, would make its nominal parent divest Pony Canyon, NBS's cashcow subsidiary producing CDs and DVDs, to depreciate the Horie's loot. Also it's in part because Horie had no specific idea all this while about his ultimate goal that he softened his signature street fighter-like rhetoric. He kept saying he wanted to form a business tie-up with the media group through which to achieve a convergence between the conventional media and the Internet.

After still staying on center stage for weeks, these people, including Horie and Hisashi Hieda, Chairman of Fuji TV finally exited from there as they could reach, on April 18, an amicable settlement thanks in part to a dubious figure, Yoshitaka Kitao, who came out of nowhere (actually he is the CEO at Softbank Investment Corp.) to arbitrate the battle. It looked to be a breeze for Kitao to tame Horie because all it took him to subdue the 32-year-old media raider was preaching him that harmony must always prevail in this land of homogeneity.

To be fair with Horie, however, he did make some difference all this while. For one thing he could reveal that Japan is not a capitalist country. When Fuji TV was desperately trying to make its shareholding in NBS outnumber Horie's stake, or at least top the threshold of 33.3% of the total outstanding shares, almost all corporate shareholders in the AM-radio broadcaster readily agreed to sell every single share they'd held to Fuji at its TOB price of 5,950 yen, which was far below the market at that time. TEPCO (Tokyo Electric Power Co.) was among those who went out of their minds so much as to accept the Fuji TV's tender offer. There were only a handful of decent companies, such as Toyota Motor, Asahi Breweries, etc., who acted like capitalists by declining the Fuji's offer. Needless to say, TEPCO's and other corporate investors' acceptance of the Fuji's tender offer at a price significantly lower than the market price constituted a downright and outrageous fraud. As if that wasn't enough, when the Fuji TV and Livedoor buried the hatchet on April 18, the TV broadcaster offered to purchase all the NBS shares the Internet service provider had acquired by then at 6,300 yen per share. And surprisingly enough, nobody has accused Fuji TV who is now buying the Horie's stake in NBS at a much higher price than its own tender offer price just weeks ago. After all, this convoluted and often collusive cross-shareholding structure particular to Japan has nothing to do with capitalism.

But perhaps more importantly, Horie could remind us that the Japanese mainstream media should be revolutionized, in one way or the other, although he failed to make a specific, valid and viable proposition to that end. In this context the TokyoFreePress will discuss shortly the future of the Web-based journalism more in detail in a separate piece. It's going to be a separate article because now we have learned that we can't realistically expect Horie to come up with a bright idea about a new media format. Much less is it realistic to expect the "business tie-up promotion committee" Fuji TV and Livedoor are going to set up under the agreement inked on April 18 to find a creative way of "combining the Internet and conventional media."

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