Move tied to legal problems of Internet company's founder
This article was updated on Jan. 18, 2006.>TOKYO — Fuji TV is severing its ties with Livedoor, the once-hot Internet company founded by entrepreneur Takafumi Horie, whose legal woes have caused the meltdown on the Tokyo Stock Exchange over the past three days. The TSE was forced to shut up shop 30 minutes early on Wednesday after growing investor unease about Monday’s raid on Livedoor by public prosecutors added to a rush of share sales. The benchmark Nikkei 225 index tumbled 464.77 points, or 3%, to 15,341.18 after a 462.08 point fall on Tuesday. Fuji began the tie-up with Livedoor last April after battling the Internet upstart’s attempt to take over Nippon Broadcasting System, a Fuji radio affiliate. As part of the deal, Fuji agreed to buy a 12.75% stake in the company and co-operate in various business areas, including the co-production of a stage musical and the use and promotion of Livedoor’s public wireless LAN network. The musical’s run is now ending and Livedoor may be too occupied fighting for its corporate life to develop the LAN network. Fuji can effectively end the relationship by nixing new projects and unloading its Livedoor shares. Livedoor arm Livedoor Marketing (formerly known as ValueClick Japan) is under suspicion of violating securities laws in the acquisition of a publishing company via a phony stock swap by Livedoor Marketing. Investigators are also looking into allegations that Livedoor filed false pretax profits for the fiscal year ending September 2004. If the allegations prove true, Livedoor could lose its TSE listing. Horie, known for his brash style and aggressive take-over tactics that have shaken up the conservative Japanese business world, is also under investigation. On Thursday, Livedoor released the result of an internal probe claiming no wrongdoing in the Livedoor Marketing deal. TSE president Taizo Nishimuro, however, called Livedoor’s explanation “extremely sketchy” and is demanding further information. Despite the uproar over Livedoor, which brought a tsunami of selling that wiped out more than $300 billion in shareholder value on the TSE, Fuji TV has escaped major damage for the moment. Its shares rose 21,000 points in trading on Thursday to 303,000. The same can’t be said of Livedoor. Its shares were marked down Wednesday to $4.30, wiping out more than $1.8 billion of the company’s market value. Fuji, one of Japan’s Big Three networks, is also a leading producer of films, including the megahit “Bayside Shakedown” franchise and the Koki Mitani comedy “Suite Dreams,” which has been burning up the domestic box office since its release on Jan. 14.
For all variety's headlines, follow us @variety on twitter