Kadokawa grows with DreamWorks

Toppers emphasize companies' compatibility

TOKYO — With the acquisition of 2.83% of DreamWorks for $100 million and the conclusion of an exclusive distribution agreement for Japan, Kadokawa Holdings has landed its biggest coup so far in an expansion and diversification campaign.

At a joint press conference Tuesday in Tokyo, Kadokawa prexy-CEO Tsuguhiko Kadokawa and DreamWorks principal Jeffrey Katzenberg emphasized the companies’ compatibility.

“We were impressed by (Kadokawa’s) entrepreneurial spirit and its vision for new business opportunities,” Katzenberg said.

Key among them, from DreamWorks’ perspective, is the full range of film, DVD and video distribution, magazine and book publishing and vidgame and computer game development Kadokawa offers. This is unmatched by any other Japanese entertainment and publishing enterprise.

The pair forged early links when DreamWorks remade Japanese horror hit “Ringu” into the Naomi Watts starrer “The Ring.” Kadokawa published the bestseller on which the film is based and is part of the Japanese production group.

For Kadokawa, which started as Kadokawa Shoten Publishing in 1945, the DreamWorks deal is the biggest step in its transformation from a publisher that has dabbled in the film business into a multimedia powerhouse.

The shift started in summer 2002 with the acquisition of Daiei Studio and its extensive library of Japanese classics from the financially strapped Tokuma Shoten Publishing Co.

In April 2003, the group of companies was restructured into a holding company. Last month, Kadokawa increased its shareholding in distrib-exhib Nippon Herald Films to a majority 44.1%, making Nippon Herald a de facto Kadokawa company.

Another major reorg took place April 1, when Kadokawa Entertainment was established. It regrouped the sales labels of Kadokawa film and media interests including Kadokawa Pictures (formerly Daiei), Kadokawa Video, Asmik-Ace (distribution) and Kadokawa Anime (animation). This company will be responsible for the exclusive distribution (film, video and all else) of at least 35 DreamWorks pictures in Japan starting in January.

For DreamWorks, it’s the second investment from overseas. The first came almost 10 years ago when Cheil Jedang, then South Korea’s foremost food and cosmetics group, plunked down $300 million for 11.1% of the new studio and secured an exclusive distrib deal for Korea and other parts of Asia. CJ Entertainment has since become Korea’s largest distributor and film producer.

“Our agreement with Kadokawa is similar to the one we have with CJ,” said Katzenberg in Tokyo.

The big loser in the new deal is UIP, whose Japanese branch was in charge of all DreamWorks releases. “Shrek 2” will be the last DreamWorks picture to be released by UIP in Japan. Its video and DVD releases will be Kadokawa’s business.

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