With Dan Melnick’s IndieProd. due for an infusion of $ 45 million, Japanese investment in Hollywood hasn’t completely dried up.
Japan Satellite Broadcasting, JVC, Pioneer and other investors, are upping their Hollywood stakes.
“The spigot is still open,” says Christopher Murray of Los Angeles law firm O’Melveny and Myers. “Deals are still being made.”
A deal is expected to be announced in the next few weeks between JSB and Melnick’s company. JSB and Japanese partners will put up approximately $ 45 million, which is to be augmented with a similar amount from European investors, according to a source involved in the negotiations.
“We have had a number of major U.S. studios in Hollywood vigorously competing against each other to give us the most attractive terms for our investment,” says the source.
The $ 90 million proposed joint venture would be complemented with a further $ 90 million by the winning studio-distributor.
“The process of negotiations has been very smooth,” a JSB official said.
The management of JSB, which JSB sources say, has already made a $ 13.3 million commitment to the IndieProd joint venture, has reportedly been divided over the investment.
It was only with some difficulty that JSB’s stockholders (representing 264 of Japan’s leading corporations) were persuaded to increase their capital last year to $ 307 million.
Lower-than-expected sales for the 18-month-old commercial satellite TV service have meant that the station, which now has 1 million subscribers and is expected to have 3 million and to break even by the end of next year, may not do so until 1997, according to an analysis by the leading financial daily, Nihon Keizai Shimbun.
One deal that has taken Tokyo by surprise was revealed last week when Larry Gordon announced that JVC had pumped another $ 50 million into Largo Entertainment, the $ 120 million joint-venture indie set up by Gordon and JVC Entertainment.
JVC, which has also been talking of making a further $ 50 million infusion in the near future, has been one of the hardest hit electronic manufacturers in the current economic slowdown. It expects to post an operating loss of $ 300 million in the current fiscal year.
In August, JVC announced it will reduce its 16,700-strong work force by 18% ( 3,000 jobs) before next March. There have been rumors that its 52.4% parent, Matsushita, may decide to disband the company and absorb its different units under other Matsushita brand names (like Pioneer, Technics and Quasar).
The fact that only one of Largo’s four pictures, “Unlawful Entry,” has made real money adds to the mystery.
“The buzzword is still software,” explains a Tokyo stockbroking analyst. “JVC wants to break out of its dependence on VCRs and get into more software.”
At the Tokyo Film Market (Sept. 28 to Oct. 2), JVC was a conspicuous buyer and took Japanese video rights to several films from New Line, according to New Line’s Rolf Mittweg. It has also been aggressively buying videogames and music software.
“We believe the future lies with software as much as hardware,” says a JVC spokesman. “We expect software sales and profits to increase by at least 10% this year.”
Another struggling Japanese company that is upping its Hollywood stake is Pioneer, whose subsidiary Pioneer LDC increased its capital in Carolco and assumed greater responsibility for the troubled studio’s debts two months ago.