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Americans still looking for yen, but not much action expected.

Americans Still Looking for Yen, but Not Much Action Expected

When Shigeru Masuda, the chairman of Japan's Zeron Group, speaks, both Japanese industrial giants and U.S. company executives listen very attentively. Zeron is a multi-billion dollar investment and co-venture player and Masuda offers an accurate reflection of basic Japanese thinking.

What Masuda is saying is that the tide of Japanese investments in the U.S. has peaked, particularly when it comes to the media and entertainment business, which Japan has never felt it could properly control.

"There were major monies available to the Japanese during the eighties. That's when Sony got Columbia and Matsushita bought MCA. Those were the good times in the equity market in Japan. Now we have the worst time. I doubt that they would buy those studios now. They couldn't raise that kind of money," he said.

And Masuda, whose Zeron Group (via its $25 million Media Venture Fund) is into films and television in a minimal way, predicted that -- quite apart from the funding questions -- the Japanese won't soon grab another Hollywood studio.

We are very sensitive right now to that kind of acquisition and the resentment it generates in the States," he said. "It's a little ridiculous, I know, but the American public believes that we come looking for these properties. That just isn't so.

"In the vast majority of cases, it is the Americans who contact us to explore whether we are willing to buy. Even right now, most of the major studios are for sale. They are approaching Japan. There is a lot of |underground' activity and quiet talk, but nothing will come of it.

"There are two other good reasons for this. One is our learning experience. We watch what other people have done and what happened to them. They are not doing really well.

"Apart from that, managing a media company in a foreign country isn't easy. In fact, it is very difficult. It's different from producing a product, or running a factory. After all, this is the first time that the Japanese have acquired media companies abroad. We are not that good at managing them."

Masuda said the resentful American public attitude towards Japanese investment in the U.S. doesn't jive with the line taken by American business.

"In America, everything is for sale," he maintained. "The public may not like it, but the company owners have that kind of mentality. That is the major problem - not the Japanese desire to acquire American property. The Americans come to us with proposals. They think: Japan might do something with us. Most of these deals stem from perceived American needs of Japanese money."

The Zeron Group, which Masuda characterizes as the largest independent Japanese investment management organization in the U.S., has been on the scene for the past 10 years. The privately held company recently formed Zeron Acquisitions, a public company, which looks for reverse mergers, and is expected to announce a media deal in the near future.

Zeron Acquisitions is looking for mergers with $5 million to $10 million American companies. "We merge, we inject capital, we take the company public and, usually together with a strong U.S. investment company, we try to boost that merged company into a $100 million a year company in five years," Masuda explained.

There are very few money pools in Japan aiming to invest in U.S. media. "There are a lot of trials when it comes to forming a pool," said Masuda. "They are not as successful as the media people seem to think. We don't approach the pure investor, because the business is too risky and unstable. We tend to involve the strategic media companies for investment, because they have corporate objectives."

Masuda said that the Japanese aren't so interested in quick returns, an attitude which he said the Americans have a hard time understanding. "We think much broader than that," he commented. "Our strategy goes beyond immediate returns.

"The Japanese see the tremendous opportunities of the future, both in Japan and elsewhere. We don't dominate the industry now, but eventually we will because we understand the importance of software. I don't think the Americans recognize that as clearly as the Japanese do. So, eventually, these heavy investments in software manufacture may pay off. Ten years from now, they may turn out to be a cheap buy."

Will the Japanese buy cable networks in the U.S.? No, said Masuda. "That wouldn't fit into our long-range strategy. The government, the public television people might do that."

Why didn't Matushita just buy the MCA library rather than spend billions on acquiring the whole company? It was the Americans who insisted on a package, said Masuda, because they wanted to realize maximum profits.
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Author:Wall, O.T.
Publication:Video Age International
Date:Aug 1, 1991
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