Tokyo battle is one for the books

Retailer goes to court in bid for TV firm's financials

TOKYO -- A bitter battle over control of Tokyo Broadcasting System Inc. heated up Wednesday after Japan's largest online retailer, Rakuten Inc., petitioned the Tokyo District Court for access to the television firm's accounting records.

Tokyo Broadcasting twice before has refused to hand over its financial records. The firm specifically has denied access to details of cross-shareholding deals that Rakuten claims kept it from access to company profits.

Rakuten claims Tokyo Broadcasting 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 Tokyo Broadcasting expressed opposition to Rakuten's stated ambition of increasing its stake in the company from 19.9% to more than 20%. Such an increase would enable Rakuten to consolidate Tokyo Broadcasting's results into its own earnings, effectively turning it into an arm of the online services firm.

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.

Tokyo Broadcasting has 27 affiliates in the Japan News Network, which it operates.

The network said it was skeptical of 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 company read, adding that nationwide broadcasts have only been possible because of the close cooperation and trust between members of the network.

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

Tokyo Broadcasting declined comment on Rakuten's application for a court order to examine its finances.

Rakuten claims TBS has spent about ¥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 members of the Tokyo Broadcasting board.

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

Rakuten proposed integrating the management of the two companies in October 2005 after acquiring an initial stake in Tokyo Broadcasting

The broadcaster deflected the initial approach, with the two agreeing on areas of cooperation and also agreeing 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, Tokyo Broadcasting plans to introduce at its shareholder meeting on June 28 an anti-takeover measure that would enable the company to issue equity warrants to existing shareholders to dilute any voting rights acquired by an unwelcome investor.