Masayoshi Son, the telecommunications mogul behind Tokyo-based SoftBank, has become the first Japanese player in nearly 25 years — since Matsushita’s purchase of Universal Studios — to buy his way into Hollywood.
With the entertainment industry still focused on the ramifications of Son’s attempted $3.4 billion takeover of Jeffrey Katzenberg’s DreamWorks Animation, before that offer fell apart, Japan’s richest man surprised everyone with a $250 million investment in Thomas Tull’s Legendary Entertainment as part of a joint venture that could involve up to $1 billion in support through 2018, and lead to an outright acquisition of the company.
Son, 57, who started SoftBank in 1981, is intent on building the world’s largest conglomerate. He already has poured $27 billion into 1,300 firms as part of a 300-year plan to back 5,000 companies by 2040, the end of the first part of a cycle. Until now, that has mainly involved backing tech companies — including Sprint, in what was the biggest corporate takeover in Japan’s history. Son has built a distribution system comprised of global tech ventures: e-tailing giant Alibaba and social network Renren in China; SoftBank Mobile and Yahoo in Japan; Brightstar and Sprint in the U.S.; telcom Bharti and mobile ad network InMobi in India.
He can promote entertainment through Yahoo Japan, and sell it via Alibaba, of which he is the largest shareholder, with a 32% stake. Yet while he’s snatched up successful mobile gamemakers, he still needs to make content deals with traditional TV and film producers.
That’s where Legendary comes in. Instead of buying a major studio, Son has opted to help Legendary become one. After 2018, if Tull decides to sell, Son will have the opportunity to buy. For now, SoftBank gets exclusive distribution rights to many of Legendary’s movies, TV shows and Web series, which figures to make his tech assets more popular for consumers increasingly glued to their smart devices.
Analysts, however, offer a word of caution concerning SoftBank’s varied interests.
“We don’t see a lot of rhyme or reason to the pattern of vaguely related assets SoftBank is rolling up,” says media analyst Doug Creutz. “This looks more to us like conglomeratization. Attempts have been made many times in the past to marry content and distribution. They generally have not borne fruit, and have often led to significant value destruction.”
Overseeing Son’s entertainment deals is Nikesh Arora, most recently Google’s highest-paid executive, who is now SoftBank’s vice chairman and head of SoftBank Internet and Media. At Google, Arora, 46, was the company’s chief business officer, growing the advertising biz and making YouTube attractive to Madison Avenue and Hollywood. Although he spends much of his time in Silicon Valley, Arora has some Hollywood ties. His Italian wedding was attended by Ashton Kutcher and Mila Kunis; Brad Pitt and Angelina Jolie were also invited. He’s served as an adviser to Silver Lake Partners, an investor in William Morris Endeavor.
SoftBank has the deep pockets needed to secure deals with studios. Its investment in Alibaba added $5 billion to SoftBank’s market value, which reached $87.4 billion the day the Chinese company went public.
It appears his Hollywood shopping spree has only just begun.