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Kadokawa and Dwango to Merge

TOKYO — Media conglomerate Kadokawa and video portal provider Dwango have announced their merger, effective Oct. 1.

The aim is to combine Kadokawa’s strengths in content, including pics, comics, animation, magazines and books, with Dwango’s online expertise.

The new company, Kadokawa Dwango, will be formed through a stock swap, with one Kadokawa share worth 1.168 shares in the new entity, while the smaller Dwango will exchange its shares one for one. The president of the new merged company will be Kadokawa adviser Tatsuo Sato, while the chairman will be Nobuo Kawakami, who currently occupies that post at Dwango.

“All contents will eventually be either on the Net or digitalized,” said Kawakami at a press conference in Tokyo on Wednesday. “If a company that has content also has a platform for digitally distributing them, it will make profits more easily. On the other hand, if it doesn’t have such a platform, its profits will decline.”

Launched as a publisher in 1945, Kadokawa emerged in the 1970s under former prexy Haruki Kadokawa as a leading exponent of the “read the novel, see the movie” strategy. Haruki was deposed in 1994 following a drug arrest. His brother Tsuguhiko took over, while keeping Kadokawa an active player in the movie biz.

Among recent Kadokawa pics is the Mari Asato psycho-shocker “Bilocation,” which had its European premiere at the recently ended Udine Far East Film Festival. Another is the Hiroshi Shinagawa caper comedy “One Third,” which took the top prize at this year’s Okinawa International Movie Festival.

Dwango operates the Nico Nico Douga video portal site, which had nearly two 2.17 million “premium” (paying) and 37.58 million “regular” (nonpaying) members as of the end of last year. It also supplies music and game apps for mobile devices.

The two companies first established capital ties in 2011, with Kadokawa’s stake in Dwango rising to 12.2% as of the end of the 2013 fiscal year while Dwango had a 2.49% share of Kadokawa. Merger talks first began about three year ago but went slowly due to Kadokawa’s complex corporate structure.

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