Matsushita sells stake in Uni Studios to Vivendi
Matsushita says bye to Hollywood, sells Uni stake
Feb 3, 2006
TOKYO -- Ending its 15-year investment in Hollywood, Japan's Matsushita Electric sold its remaining 7.66% stake in Universal Studios Holding to Vivendi Universal in a deal worth $1.15 billion.
After the deal closes Feb. 7, the French entertainment company Vivendi Universal SA will own 100% of Universal Studios Holding I Corp., up from the current 92%. Matsushita refused to disclose terms of the deal, but Vivendi said it was worth $1.15 billion.
Vivendi said the purchase will strengthen its global content business and boost earnings this year by at least $30 million. Matsushita said the sale will add ¥10 billion ($85 million) to its earnings.
The move marks the final chapter in the unraveling of Matsushita Electric Industrial Co.'s ambitious $6 billion purchase of the Hollywood studio more than a decade ago -- a period when other Japanese electronics makers like Sony Corp. and Pioneer Corp. were similarly buying up U.S. entertainment companies.
Back then, such efforts were trumpeted as glamorous strategic moves by the cash-rich Japanese to buy up cultural bits of America to gain what was called "synergies," or a win-win situation that comes from owning both electronics manufacturing and entertainment businesses.
But Matsushita's 1990 buyout of MCA, Universal's predecessor, produced few benefits, and it sold an 80% stake in MCA to Seagram in 1995. Vivendi acquired Seagram in 2000 and established Vivendi Universal.
On Thursday, Matsushita, which makes Panasonic brand products, said it no longer needed even a small alliance with Universal now that the arrival of online distribution of video requires partnerships with all studios to gain a wide variety of entertainment content.
"It is no longer strategically important to maintain capital ties with any particular business partner," the Osaka-based company said in a statement.
The move comes at a time that electronics makers are lining up in two camps to woo Hollywood studios to competing next-generation digital video standards -- HD DVD backed by Toshiba Corp. and NEC Corp. versus Blu-ray disc backed by Matsushita and Sony.
Eiichi Oshida, who teaches media studies at Kwansei Gakuin University in Osaka, said Matsushita Electric is making a smart move in focusing on its main business of making gadgets rather than trying to dabble in movies.
"It's best it sticks to electronics," he said.
Sony, which has powerful movie, music and video-game divisions, still owns Columbia Pictures, bought in 1989, although its purchase was widely criticized for years as disastrous. Carolco Pictures that Pioneer invested in went bankrupt.
Isaku Ogura, lecturer on digital images at The Graduate School of Digital Content, in Tokyo, said Matsushita still needs to make sure it has strategic relations with other companies to succeed.
"To increase its market share globally, it should work with various content providers," he said.
In contrast to the initial MCA purchase that sent Matsushita tumbling into losses, the latest move will work as a monetary plus during fiscal 2005 from disbanding Matsushita's holding company related to Universal assets, the company said.
Universal Studios Holdings holds a 20% stake in NBC Universal, a broadcasting and entertainment company owned by General Electric Co.
In 2004, NBC Universal was set up through the merger of General Electric's broadcasting division and the movie-and-theme park business of Vivendi Universal.
Matsushita has marked a turnaround on booming flat-panel TV sales after struggling in recent years as prices plunged and competition intensified from powerful Samsung Electronics Co. of South Korea and lesser known rivals from China and Taiwan.
In earnings announced Thursday, Matsushita said it chalked up a ¥49.3 billion ($420 million) group net profit for the quarter ended Dec. 31, up 39% from 35.6 billion the same period the previous year. Quarterly sales were up 4% at ¥2.398 trillion ($20.4 billion).
Matsushita also revised upward its outlook for the full year ending March 31 to a ¥130 billion ($1.1 billion) profit, up from a previous ¥110 billion ($936 million). Sales were projected to grow ¥8.84 trillion ($75 billion) from ¥8.72 trillion ($74 billion).
Shares in Matsushita, which have gained by two-thirds over the past year, closed up more than 1% at ¥2,515 ($21; €18). Tokyo trading ended before earnings were announced.
After the deal closes Feb. 7, the French entertainment company Vivendi Universal SA will own 100% of Universal Studios Holding I Corp., up from the current 92%. Matsushita refused to disclose terms of the deal, but Vivendi said it was worth $1.15 billion.
Vivendi said the purchase will strengthen its global content business and boost earnings this year by at least $30 million. Matsushita said the sale will add ¥10 billion ($85 million) to its earnings.
The move marks the final chapter in the unraveling of Matsushita Electric Industrial Co.'s ambitious $6 billion purchase of the Hollywood studio more than a decade ago -- a period when other Japanese electronics makers like Sony Corp. and Pioneer Corp. were similarly buying up U.S. entertainment companies.
Back then, such efforts were trumpeted as glamorous strategic moves by the cash-rich Japanese to buy up cultural bits of America to gain what was called "synergies," or a win-win situation that comes from owning both electronics manufacturing and entertainment businesses.
But Matsushita's 1990 buyout of MCA, Universal's predecessor, produced few benefits, and it sold an 80% stake in MCA to Seagram in 1995. Vivendi acquired Seagram in 2000 and established Vivendi Universal.
On Thursday, Matsushita, which makes Panasonic brand products, said it no longer needed even a small alliance with Universal now that the arrival of online distribution of video requires partnerships with all studios to gain a wide variety of entertainment content.
"It is no longer strategically important to maintain capital ties with any particular business partner," the Osaka-based company said in a statement.
The move comes at a time that electronics makers are lining up in two camps to woo Hollywood studios to competing next-generation digital video standards -- HD DVD backed by Toshiba Corp. and NEC Corp. versus Blu-ray disc backed by Matsushita and Sony.
Eiichi Oshida, who teaches media studies at Kwansei Gakuin University in Osaka, said Matsushita Electric is making a smart move in focusing on its main business of making gadgets rather than trying to dabble in movies.
"It's best it sticks to electronics," he said.
Sony, which has powerful movie, music and video-game divisions, still owns Columbia Pictures, bought in 1989, although its purchase was widely criticized for years as disastrous. Carolco Pictures that Pioneer invested in went bankrupt.
Isaku Ogura, lecturer on digital images at The Graduate School of Digital Content, in Tokyo, said Matsushita still needs to make sure it has strategic relations with other companies to succeed.
"To increase its market share globally, it should work with various content providers," he said.
In contrast to the initial MCA purchase that sent Matsushita tumbling into losses, the latest move will work as a monetary plus during fiscal 2005 from disbanding Matsushita's holding company related to Universal assets, the company said.
Universal Studios Holdings holds a 20% stake in NBC Universal, a broadcasting and entertainment company owned by General Electric Co.
In 2004, NBC Universal was set up through the merger of General Electric's broadcasting division and the movie-and-theme park business of Vivendi Universal.
Matsushita has marked a turnaround on booming flat-panel TV sales after struggling in recent years as prices plunged and competition intensified from powerful Samsung Electronics Co. of South Korea and lesser known rivals from China and Taiwan.
In earnings announced Thursday, Matsushita said it chalked up a ¥49.3 billion ($420 million) group net profit for the quarter ended Dec. 31, up 39% from 35.6 billion the same period the previous year. Quarterly sales were up 4% at ¥2.398 trillion ($20.4 billion).
Matsushita also revised upward its outlook for the full year ending March 31 to a ¥130 billion ($1.1 billion) profit, up from a previous ¥110 billion ($936 million). Sales were projected to grow ¥8.84 trillion ($75 billion) from ¥8.72 trillion ($74 billion).
Shares in Matsushita, which have gained by two-thirds over the past year, closed up more than 1% at ¥2,515 ($21; €18). Tokyo trading ended before earnings were announced.
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