Professional Documents
Culture Documents
TVVA sahi T
Asahi heatrical P
Theatrical roductions
Productions
Presents
K enj i
Starring
Kenji SSudo
Kenji udo
Y asu K
Yasu at a
Kata
H idedata N
Hidedata ishimura
Nishimura
E
Exxeeccuuttiivvee S
Suum
mmmaarryy
Kenji (Drama, 1996)
Starring Kenji Sudo
Yasu Kata
Hidedata Nishimura
Originally the brainchild of Hidedata Nishimura, TV Asahi Theatrical Productions, Inc. was
established to produce Broadway-style musicals with the intention of bringing blockbuster hits
back to Japan. Established in 1982, its Vice President, Kenji Sudo has managed to grow the
business to returning profits of $1.5 million on revenues of $15 million by 1993. This was
accomplished by producing such Tony® Award-winning musicals as “Guys and Dolls” and “The
Secret Garden.”
Now that Nishimura has retired from the business, Kenji has found himself without
management support. As his contract precariously hangs in the balance, TV Asahi seems to pay
little attention to Kenji’s initiatives. Further, when his only connection to Japan, Yasu Kata,
plans to retire, he discovers his far-away parent company has no plans to replace the departing
Japanese Vice President. With his only connection to Japan and his only executive sponsor
gone, can Kenji save his company—and his job?
Perhaps TV Asahi’s focus on digital broadcasting, Kenji can muster financial support from his
Japanese superiors. Enticing them with the lucrative returns of Pay-Per-View™ subscriptions to
Broadway smash hit musicals, Kenji can ensure returns more than adequate given this risky
proposition. While Kenji’s risky New York escapades currently return only 6.2% on investment—
a measly 0.2 percentage points above the company’s overall ROE—incorporating Pay-Per-View
into his business model could help boost that number several times over.
TV Asahi
B
Baackground
ckground
Originally conceived November 1, 1957, TV
Asahi began operations under the name Nippon
Educational Television Co., Ltd., on February 1,
1959. In the forty intervening years, this small
educational broadcaster has become one of the
main content providers in Japan, reaching over
97% of Japanese households. With a corporate
objective of becoming Japan’s “top total
content provider,” TV Asahi faces a myriad
opportunities at the dawn of digital
convergence. With the recent insurgence of
digital “pay-per-view” broadcast models, TV
Asahi has radically restructured its information content, providing “entertainment-only”
broadcasts during the late evenings and seeking high-profile and –return investments.
Established in 1982, TV Asahi Theatrical Productions was the sacred cow of TV Asahi’s number
two man, Hidedata Nishimura. Spawned by his fondness of western-style musicals and a hunch
that this format would prove popular to the Japanese, TV Asahi Theatrical Productions (TP) was
shared the mandate of its parent division, the Special Events Division (SED), of enhancing TV
Asahi’s image through event sponsorship. The SED had engaged in such diverse activities as
media content publishing, art exhibitions, and popular music shows, such as the mega rock
festival, Summer Sonic 2000, featuring over 30 rock and pop performers.
Through the strong leadership and networking of TP’s New York Vice President, Kenji Sudo, TV
Asahi brought such Tony® Award-winning Broadway musicals as “Dreamgirls” and “Guys and
Dolls” to Japan. With 1995 profits of $1.5 million on revenues of $15 million, TP was a minor
player in the TV Asahi Group, which realized net sales of over ¥225 billion in 2001 ($1.7 billion
US).
TThe
he Problem
Problem
Due to Japanese mandatory retirement regulations, Nishimura
left the company in 1996, leaving Kenji without a strong
confederate on the “inside” in the parent company. Sudo had
been living in the US for 30 years and worked in TV Asahi’s New
York location for 20. It was clear that his operations were
distinct and alienated from headquarters in Japan. In fact, his
only connection to head office was to have his musical
contracts vetted. It was already apparent that without
Nishimura’s strong push, TP was in danger of losing financial
support; Kenji’s Japan counterpart, Yasu Kata, faced
mandatory retirement and the parent had no plans to replace
him.
By this time, Kenji had developed strong contacts in the close-knit theatrical circles and had
even been inducted as a voting member for the Tony® Awards. TV Asahi executives seemed
not to share Nishimura’s fondness for western musicals and did not understand western show-
business. While Disney Corporation continued to invest heavily in Broadway theatres and other
Japanese broadcasters ramped up their theatrical involvement, it seemed imminent that
Kenji’s efforts and accomplishments would fall to the wayside. Clearly, TV Asahi would have to
make a strategic decision about the future of its TP unit.
TV Asahi
Company Strategy
TV Asahi endeavours to become Japan’s top “total content provider,” leveraging digital
terrestrial, satellite, and broadband technologies to take on the top Japanese broadcasters
head-to-head. The cover of its FY2001 Annual Report has only three bold words: “Building
Shareholder Value.” These three words epitomize TV Asahi’s goal of maximizing shareholder
returns through seeking high-profile, high-return investments with relatively low risk.
Nadler and Tushman (1997) proposed a managerial decision-making model which considers such
external factors as environment and resources as well as internal factors, such as
organizational structure and culture to select alternatives congruent with the organization.
TThere’s
here’s N
NooB usinesss LLike
Busines ike Show B
Show usines
Busineesss…
…
Cliques Abound
Indeed, TV Asahi Theatrical Productions faces unique challenges. The show
business culture is largely based on cliques and being on the “inside.” Over
the years, Kenji had worked his way up to having excellent rapport with
theatre owners and directors. He was even inducted to be a voting
member of the Tony® Awards. This gave Kenji unique competencies in
bringing western musicals to Japan; however, his office comprised Kenji
and his assistant. No further successors have been trained or introduced to
this clique. Without Kenji, TP has nothing.
A lternati
Alternat ves
tiives
It is evident that in light of the departure of its President and Japanese Vice President, TP will
undergo significant changes. Kenji can either be in the driver’s seat or riding shotgun;
whatever the case, with his two main Japanese contacts gone and his contract up for renewal,
his future—and the future of TP—now precariously rest in the hands of his Japanese superiors.
Of particular importance in considering each alternative was their impact on shareholder value,
subscriber base, and on TV Asahi’s contribution to Japanese cultural nourishment.
Do Nothing
TV Asahi could renew Kenji’s contract and deal with the issue next
year.
Kenji’s performance has brought meagre returns given the level of
risk associated with theatrical production. Although renewing Kenji’s
contract as-is would provide little marginal benefit to shareholders,
it would provide some visibility to increase subscribers. Given TV
Asahi’s emphasis on the educational-entertainment (Edu-tainment)
segment, Broadway musicals are likely to appeal to this viewer
segment. Allowing Kenji to continue bringing Broadway musicals to
Japan would continue to “give back” to society. Producing western
musicals, however, remains a risky business. With only 20% of all
projects expected to turn a profit, the overall expected monetary
value of all projects is expected to be negative. This would provide
little benefit to shareholder value.
Increase Funding to TP
Kenji currently enjoys 100% approval on his propositions in spite of his
meagre returns. Increasing funding to TP could increase the number of
Broadway musicals brought to Japan, resulting in a major “giving back to
Japan” factor; however, it would have little impact on shareholder
value, since the expected returns would be only on par with current
ROE, with no risk premium. In fact, shareholders could view this to have
a negative impact.
TV Asahi
Multicriteria D
Multicriteria ecision M
Decision atrix
Matrix
TV Asahi should consider not only the most important criteria in deciding what action to take,
but also the relative importance of each criterion. Based on the FY2001 Annual Report, the top
three most important criteria were identified to be (in decreasing order) a. Increasing
shareholder value; b. Increasing subscriber base; and c. Contribution to Japanese society.
These primary objectives were given weights from 1 to 3.
Relative
Criterion Rationale
Weight
As a publicly-traded company, TV Asahi’s main goals should
Increase be to maximize return on shareholder value; that is, it
Shareholder Value 3 should undertake projects with the highest returns on
investment possible.
Increase subscriber Key to the broadcasting business is maximizing exposure to
base 2 gain visibility and attract advertising spots.
Unique to the Japanese culture, firms are expected not to
Contribution to undertake projects that dishonour or bring shame to Japan;
society 1 further, they are expected to pursue projects to nurture
cultural enrichment.
Given these criteria, the various alternatives were evaluated systematically on a scale from 1
to 10 (detailed in Appendix II):
Shareholder Subscriber Base Contribution to
Alternative Overall Score
Value (3) (2) Society (1)
Do Nothing 2 3 5 22
Cancel TP 5 3 3 21
Increase Funding 2 4 7 24
Switch to UK 2 3 5 22
Pay-Per-View
7 6 6 39
Contingent Plan
TV Asahi
R
Reeccoom
mmmeennddaattiioonnss
Aggressively Pursue Pay Per View™ Deals
It is clear that the most preferred course of action is to increase funding to TP contingent upon
offering Broadway musicals as a Pay-Per-View service. This is further congruent with TV
Asahi’s strong plans to launch satellite and digital terrestrial services and become Japan’s
foremost total content provider. TV Asahi should measure return on investment for the year.
If return on investment is not dramatically above the overall TV Asahi ROE, the TP program
should be abandoned and its resources reassigned to higher visibility, higher return projects.
A
Accttiioonn P
Pllaann
Garner Management Buy-In
Kenji must realize that his lack of proactive schmoozing with top Japanese executives over his
20-year career has earned him complacency. Now that Nishimura has retired, there is no
Japanese top executive to champion the program. Kenji must now convince TV Asahi to
continue to fund his program by outlining the tremendous gains to be had by leveraging the
digital network and pay-per-view technology to earn huge returns. Kenji must formulate this
plan and draw up pro forma income statements for this proposal immediately. Since he only
staffs a single assistant, this could be accomplished at low cost with an MBA intern.
TV Asahi
EEEnnnvi
vviirrronment/
oonnm Reeesources/
meenntt//R
R ssoouurrcceess//H
Hiiissstory
H ttoorryy
- Reaches 97% of Japanese households - Top four Japanese broadcaster
- Theatre society very cliquish - Possible deregulation
- Total FY2001 assets of ¥308 bn - Total FY2001 revenues of ¥225 bn
SSStttrategy
rraatteeggyy
- Clear differentiation of target lineup by time - One-year “producer/director” contracts
- Focus on informative entertainment - Before-the-hour start times (get a jump)
- Employ mid-career personnel - Acquire rights to sporting events
O
Orrggaanniizzaattiioonnaall C
Organizational Cuullttuurree
Culture
- Ethnocentric
- Originally
conservative, now
pursuing poignant
content
- “Old boy’s
network” culture
at home office in
Japan
C
C mppeetteenncciieees
Cooompetenci
m ss FFFooormal
maall O
rrm O ggaanniizzzati
Orrrgani aattiiooon
nn
- Kenji a voting A
A r
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Arrangements mm ee nn t
tss
member of Tony® - Network of 26
Awards affiliated stations
- Satellite and - Committed to
digital sports events and
technologies popular music
- Content publishing (high
management revenues, high
- exposure)
- “Giving back” to
T
Taaask
T sskksss Japan
- Committed to
“Building
Shareholder Value”
(Annual Report,
2001)
- Seek and provide
total content to
viewers
O
O ttppuuttss//O
Ouuutputs/ Obbbjjjeeecti
O ccttiivvves
eess
- Defend strong domestic position
- Seek high-profile, high-return investments with positive NPV and relatively lower risks
-