Japan's Rakuten files for TBS disclosure

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TOKYO -- The bitter battle over control of Tokyo Broadcasting System Inc. heated up Wednesday after Internet shopping mall operator Rakuten Inc. petitioned the Tokyo District Court for access to the television firm's accounting records.

TBS has refused twice before to hand over its financial records.

Specifically, TBS has denied access to details of cross-shareholding deals that Rakuten claims kept it from profit.

Rakuten claims TBS sold shares to firms it could count on not to resell them, thereby keeping them away from Rakuten.

The legal move comes a day after broadcasters affiliated with TBS expressed their opposition to Rakuten's stated ambition of increasing its share in the company to more than 20%.

Such an increase would enable Rakuten to consolidate TBS' accounts into its own figures, effectively turning it into an arm of the online services firm.

"Rakuten should release its shareholdings in TBS and then seek to establish a business alliance with the company," Masahiro Yamamoto, president of Mainichi Broadcasting, said at a news conference in Tokyo.

TBS has 27 affiliated companies in the Japan News Network, which in a statement said it was skeptical about Rakuten's ability to raise the value of the organization.

"We acknowledge that the TBS brand belongs not only to TBS, but also to the entire network," the statement read, adding that nationwide broadcasts have only been possible because of the close cooperation and trust between members of the network.

TBS is refusing to comment on Rakuten's application for a court order to examine its finances.

Rakuten claims TBS has spent some ¥90 billion ($750 million) on cross-shareholding deals and claims the move could be construed as an illegal act designed to protect the personal interests of the TBS board.

The broadcaster says it will not provide the figures because many of the companies that hold shares in TBS are business rivals of Rakuten.

Rakuten proposed integrating the management of the two companies in October 2005, after acquiring an initial stake in the company.

The broadcaster deflected the initial approach, with the two agreeing on areas of cooperation and that Rakuten would put its stake in the company into trust and freeze its voting rights.

Concerned that the Internet firm is planning a full takeover, TBS will introduce a system at its general shareholders' meeting this month that would enable the company to issue equity warrants to existing shareholder to dilute any voting rights acquired by an unwelcome investor.

The affair has echoes of the campaign by Internet mogul Takafumi Horie to take control of Fuji Television Network in 2005, though that hostile approach came to a halt when Horie was arrested for fraud.
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