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Hostility rejected

Fuji ups NBS stake as Horie bid sputters

TOKYO — Internet portal Livedoor’s hostile takeover of Nippon Broadcasting System (NBS) stalled Tuesday after the radio broadcaster’s much larger TV affil Fuji announced it has upped its stake to 36.47% of NBS shares.

This gives Fuji power of veto at shareholder meetings where two-thirds of votes are necessary to pass important resolutions.

The move foils Livedoor CEO Takafumi Horie’s attempt to control NBS, and hence, the much more important Fuji TV.

Livedoor acquired close to 40% of NBS shares in an out-of-hours trading coup a month ago.

This gave Livedoor undue sway over Fuji because of an unusual share structure in which the much smaller NBS — which has a market capitalization of $1.7 billion — owns a disproportionately large 22.5% stake in Fuji, market cap $5.2 billion, and in its parent, the Fujisankei Communications Group, Japan’s largest media company.

Fuji TV has been trying to reverse the distorted cross-shareholding since January.

Livedoor is continuing in its bid to acquire 50% of NBS and could continue to make life difficult for Fuji, because it too can use its stake to veto decisions at shareholder meetings.

But the power play will probably mean that NBS is delisted from the Tokyo Stock Exchange, which does not allow the top 10 shareholders to own more than 80% of a company.

For Horie, who sees the end of television as we know it in 10 years and wants to shift media to the Internet, the battle is not over but doesn’t look promising.

Livedoor had asked the Tokyo District Court to issue an injunction to stop NBS from issuing warrants for new shares allocated to Fuji TV.

If warrants for new shares are allowed to be issued, Fuji TV will exercise its right, aiming to secure a more than 50% stake in NBS.

Fuji TV spokesman said it would not accept Livedoor’s request for negotiations over a business tie-up, saying there was no room for dialogue.

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