Livedoor and Fuji TV in tie-up talks

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Livedoor and Fuji TV are in negotiations that could lead to a resolution of their two-month clash over Nippon Broadcasting Systems.

The pair did not disclose the details of the proposed deal. But Japanese media have reported that the discussions centre on a plan for Livedoor to sell most or all of its NBS shares to Fuji TV and for Fuji TV to take a stake of about 15 per cent in Livedoor.

?We are discussing a capital and business tie-up and our ownership of NBS shares,? a Livedoor representative said on Wednesday, adding that no agreement had yet been reached.

The admission is the strongest indication so far that Japan's leading national TV broadcaster and the internet start-up, which until only a few weeks ago were arch-enemies, could yet become business partners.

The news prompted Livedoor's shares to rise nearly 13 per cent to Y331 on Wednesday, regaining some ground after the fall to a 12-month low on Tuesday. NBS shares closed up more than 6 per cent at Y6,080.

However, if the talks break down, Livedoor is expected to propose a major management reshuffle at NBS at its annual shareholders' meeting in June, including the appointment of Takafumi Horie, Livedoor president, as an NBS director. Livedoor, which acquired a 50.21 per cent stake in NBS in a bold hostile takeover that has unnerved normally conservative corporate Japan, wants a business tie-up with Fuji TV to realise its ambitions of integrating its internet services with the TV company's broadcasting operations.

NBS, a radio broadcaster belonging to the Fuji Sankei media group, was Fuji TV's largest shareholder with a 22.5 per cent stake and Livedoor has itself acquired a small stake in Fuji TV, of less than 5 per cent.

However, last month NBS lent the bulk of its Fuji TV stake to Softbank Investments and the remainder to Daiwa SMBC, the investment bank, thereby losing its voting rights over Fuji TV and weakening Livedoor's influence over the TV broadcaster.

Livedoor's and NBS's shares have fallen sharply in recent weeks. Although both stocks rose yesterday, Livedoor's are still 29 per cent below their peak of Y469 reached on the day after it announced it had a 35 per cent stake in NBS.

Meanwhile, NBS's shares have fallen 22 per cent since hitting a recent high of Y7,840, two days after Livedoor's unsolicited bid was revealed. The shares are still substantially below the average price at which Livedoor acquired its stake, estimated to be about Y6,830.

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