Bitter struggle between Matsushita and Sony appears headed for Hollywood

September 30, 1990|By David E. Sanger | David E. Sanger,New York Times News Service

TOKYO -- For years it has been the stuff of Japanese industrial legend: the bitter struggle between the plodding Matsushita Electric Industrial Co. and the upstart, innovative Sony Corp., a fight that began with transistor radios and over the decades spread to the Walkman, the video camera and high-definition television.

1% Now that same rivalry, played out

mostly in the winding back streets of Tokyo and Osaka, appears headed for Hollywood, where it could change forever the structure of the American entertainment industry. It could also mean a big change in strategy for Matsushita.

Matsushita, Japan's largest consumer electronics company, is negotiating to acquire MCA Inc., the owner of Universal Pictures, Universal Television, Motown Records, some other hot media properties in the United States and a troubled theme

park in Orlando, Fla.

If a deal is made, at perhaps $7.5 billion, it would be the biggest Japanese purchase yet in the United States, surpassing even the deal that inspired it: Sony's $5 billion purchase last year of Columbia Pictures.

But the deal is far from a sure thing. Matsushita Wednesday described the negotiations as preliminary, and said no details had been worked out so far. Moreover, the company, which makes Panasonic, Technics and Quasar brands, is a reluctant suitor.

Until they were goaded by their rival's purchase of Columbia Pictures, and CBS Records before it, Matsushita executives were focusing their 1990s strategy on computers, not movie studios.

What changed their thinking, it seems, were two men at Sony who have spent the last three decades

taunting their larger rival.

They are Norio Ohga, Sony's president, and Akio Morita, the company's fast-talking, energetic chairman. Mr. Ohga and Mr. Morita first articulated the need for a corporate "synergy" between Japanese-made hardware and American-developed "software" -- recordings, movies, television shows and the studios that produce them.

"There is little question that Matsushita is following Sony's lead," said Boris Petersik, an analyst at Barclays de Zoete Wedd Securities. "But that isn't the worst strategy."

But Japanese executives point out that the strategy is not only Sony's or Matsushita's, but Hollywood's. Since the Columbia Pictures deal, other studios have felt equal pressure to have a well-financed, prestigious Japanese partner.

, And few companies are better

equipped to fill that role than Matsushita. In addition, the Japanese tend to be passive investors, steering clear of film decisions, for example, and this also pleases Hollywood.

The company will rake in about $45 billion in revenues this year. At the end of March, Matsushita had more than $12 billion in cash, with another $13 billion in short-term securities and other resources that are

easily accessible. That is a huge war chest even by Japanese corporate standards, so large that Matsushita would not need financing for the deal.

But until recently, Matsushita's international ambitions rarely matched its bank account.

Unlike Sony, its attention has always been focused foremost at home.

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