TBS changes corporate structure

Shareholders asked to ratify decision in Dec.

TOKYO — Tokyo Broadcasting System, one of Japan’s top five TV networks, will change its corporate structure in order to avoid a hostile takeover bid and ease the transition to digital.

The net’s board decided Thursday that TBS will switch from an ordinary stock-holding company to a holding company structure. The holding company will own the stock of TBS and its subsidiaries, but not manage TBS’s business day-to-day.

A shareholders meeting in December will be asked to ratify the decision. If it is passed, TBS will become the second net, after Fuji TV, to make the move.

Key reason for the shakeup is to make TBS less vulnerable to maneuvers by Rakuten, an Internet retailer that owns 20% of TBS shares. Rakuten mounted a hostile take-over attempt for the network starting in 2005 and has long been angling for a greater voice in TBS’s corporate governance.

According to Japanese regulations, no shareholder can own more than one-third of a holding company’s stock, making a Rakuten buy-out of TBS tougher. Rakuten may oppose the change to a holding company structure at the upcoming board meeting.

Another reason for the restructuring move is that, as a holding company, TBS can more easily transfer broadcasting licenses and facilities to its affiliates, and ease their transition to digital broadcasting. TBS is what is called in Japan a “key station” with a network of 28 TV affiliates across the country.

Japan is skedded to pull the analog plug in July 2011 and many regional affiliates of the major networks are struggling to stay out of the red as they buy new equipment and prepare for the changeover.

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