Wednesday, Dec 13, 2017
Conglomerate | Asia-Pacific | Japan

Fuji Media Holdings

Media pioneer broadens its portfolio


2 years ago

Hisashi Hieda, Chairman & CEO of Fuji Media Holdings
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Hisashi Hieda

Chairman & CEO of Fuji Media Holdings

Focusing on its popular content and a diversity of platforms and revenue streams, Fuji Media Holdings is expanding its array of business interests and also has plans to tap Japan’s rapidly rising tourism sector. Chairman & CEO Hisashi Hieda provides an exclusive insight into what’s happening in the world of Japanese media.

 

How would you evaluate Fuji Media’s contribution towards Japan’s media over the years, and how do you believe Fuji has aided with the country’s cultural development?

Japanese television has a history of about 60 years, and we have been fortunate enough to develop the television industry post war, at a time when the economy was growing, even though it experienced some temporary downturns. The industry consists of around 200 terrestrial TV broadcasters and yet, in the entire history of television in Japan, not a single company has gone bankrupt. There is no such business in the world. Therefore I believe we are very blessed to be in a very strong and unique industry. That doesn’t mean that there is no competition: on the contrary, there is intense competition with regard to popularity index, viewership ratings, all critical for our media and revenue. Viewership ratings serve as an important index to all TV stations in the sense that it has direct impact on the advertisement revenue.

There are five key players in the TV industry in Japan, and Fuji Television Network, Inc., a wholly owned subsidiary and the core company within the Fuji Media Holdings group is one of them. However, we were a latecomer into the industry. As the fourth media to enter the terrestrial TV market, we felt that we needed to launch fresh new ideas and eye catching, unconventional shows, or the audience or viewers will not tune in. This philosophy today very much runs in the DNA of Fuji Television: we never wanted to be a copycat or follower, but an innovative company with fresh and new ideas, which is our pride and characteristic.

In 1980, as we were still a young organization, our ratings were still rather low, and it impacted our broadcast and advertisement revenues. So we went through a big reform and completely reorganized our company. We threw out and scrapped everything out from the past and made a fresh new start. In doing so, we implemented a slogan, “If it’s not fun, it’s not television”. Our credo was to provide entertainment on television, which had to be something that brings fun and joy to people in its true sense. All of the company structure, management, operations, employees and the company as a whole shared and embraced this new slogan. We became united with this one simple message – “If it’s not fun, it’s not television”. After this innovation our viewership ratings and our broadcast revenues rose instantly, putting us in the top position. And with this spike, we attracted new viewers and were able to become the leader of Japanese television.

Fuji Television has always been the trendsetter, always a step ahead of the curve to foresee what the next coming trend will be, whether it be the technological advancement of hardware or the creative development of software. Whether in drama, music or in the information program section, our employees are always searching for a golden opportunity.

Here are some examples that show Fuji Television’s innovative and creative DNA.

Today, the internet is an established form of communication and marketing, but the tele-shopping business in Japan originated from providing product information to the viewers through Fuji Television’s programs.

Almost 50 years ago, one of our programs introduced genuine diamonds mined and produced in South Africa at an affordable price in spite of the fine quality and size. This program originally had no intention of selling products directly, but only meant to convey product information to the viewers. Yet after the broadcast, a large number of viewers called the station, we were inundated with calls from people asking where the items could be purchased, how much they were, and all sorts of other questions. The producer of the program saw a new opportunity to sell products for themselves.

This was the dawn of direct marketing on television, or the tele-shopping business. And it led to the launch of a direct marketing company called Dinos Cecile Co., Ltd, which offers a popular catalog and online shopping service. It has become one of the main subsidiaries within Fuji Media Holdings’ portfolio. In fact, tele-shopping is an industry that Fuji Television originally created in Japan. The spark that led to all of this comes from that one producer who was bright enough to notice the chance of a good business opportunity.

Here is another example of our pioneering spirit to illustrate the innovative mind which is the core of Fuji Media’s DNA.

Japan’s first satellite broadcast platform, now known as SKY Perfect JSAT, was formerly established as JSkyB through a collaboration with Rupert Murdoch’s Sky, Sony, Softbank and Fuji Television. We were one of the first companies in Japan to start satellite broadcasting. The four companies gathered for this venture to form a satellite broadcast platform named JSkyB, now known as the extremely successful SKY Perfect JSAT.

Fuji Television started out as a terrestrial TV network and later added satellite broadcast, and has further developed many other businesses and various outlets. We did not limit our business to terrestrial broadcast alone, even though some in the industry conventionally thought otherwise. On the contrary, we went further and grew into a much bigger conglomerate, an idea that we initiated and has now spread throughout the industry.

Our industry is currently facing certain challenges: as you may well know, these challenges are triggered by the revolutionary rise of digital technology. Just as we had predicted, print media revenues and newspaper circulation dropped, and the same will occur to television if we rely solely on broadcast revenues. Every new form of media becomes a threat to our industry. We’ve had that foresight all along so we moved on to create new businesses and develop new activities in different directions to sustain our broadcast business. That is why we have formulated the media conglomerate that you see today. 

 

Fuji Media Holdings’ consolidated financial results as of the fiscal year ended on 31 March, 2015 showed an impressive 643 billion yen in net sales, which is the maximum to date. What do you attribute the growth to, and how do you hope to sustain it?

These strong revenues are attributable to the philosophy and the basic thinking behind Fuji Media Holdings. We have become the first certified broadcasting holdings company in Japan, with Fuji Television as the core company, but we have also many other subsidiaries in various business fields. Speaking of our corporate philosophy, I would like to emphasize that we think of ourselves as a “media” company, not just a TV station or a broadcaster. That is why we named ourselves Fuji Media Holdings, which is unique, because no other certified broadcasting holdings company has “media” in their names. That means that as a media company, we deal with the entire spectrum of media. But media in a broader sense is to become a link between people. Our portfolio ranges from terrestrial TV to satellite broadcast, internet distribution, movie, events, radio, magazine, publication, music, DVD, music copyrights, advertisement, catalog and internet shopping services, television shopping, real estate, hotels, museums, aquarium, tourism and others, all of which we think is “media” that brings people together. By investing in other areas and not just relying on broadcast revenues alone, we can protect our core enterprise – which of course is broadcasting – with revenues from other business streams.

At the end of fiscal 2014, the consolidated net sales of Fuji Media Holdings totaled over ¥640 billion, which surpasses the rest of the industry. Half of the revenues came from Fuji Television operations. The other half is attributed to our group’s other businesses; most profitable are the hotel, real estate, and urban development sectors, as well as the tele-shopping, internet and catalogue shopping sector. Fuji Television’s viewership is currently lagging behind and since our TV advertisement revenues are influenced accordingly, the other businesses are bringing in the revenue, or in other words, ‘supplementing’ the decreased revenue. My wish is for the television division to regain its market share and become the leader again. When we recapture that seat of honor, with half of the revenue coming from Fuji Television, boosting the revenue to ¥700 billion in consolidated net sales is not so much a difficult task.

Between now and 2020, when Tokyo hosts the Summer Olympic Games, tourism will continue to flourish, and that particular sector will strongly benefit our group’s growth. Our hotel business, attractions such as aquariums, museums and entertainment – the service sector’s productivity as a whole – will likely be the driver of growth for us as a holding company.

 

Where would you like to take Fuji Media in terms of new business?

There are basically two areas where I see growth. The first is in the broadcast industry itself. We know that diversification and conglomeration will continue and therefore must be equipped to deal with the complexities they require. We have to maintain an innovative mind and display further digital advancement. For example, in the digital arena we are going towards 4K or 8K resolution TV displays.

Diversification is crucial and this entails providing a wide range of services: broadcasting, on-demand, packaged entertainment or events. But we also have to expand our services to account for those who prefer to watch programs on the internet, smartphone or tablet – so distribution as in streaming services and technology are both important.

We have a music publishing company in the United States. We have invested ¥10 billion assets worth in that company, which owns music copyrights to rock and roll classics such as “Surfin’ USA”.

We can continue our growth as long as we have attractive content that can be exploited through different platforms and channels. We will certainly not limit ourselves to terrestrial broadcasting, but instead will diversify our range of activities and businesses.

The second area of presumed growth is tourism. Tourism is expanding in Japan, and entertainment/information is a field that is close to tourism in my opinion. Tokyo will host the 2020 Olympic and Paralympic Games; and tourism is a promising business that has the potential to grow quickly with a large spillover effect.

Tourism in Japan is a late starting industry compared to other countries. However, it is included in one of Prime Minister Shinzo Abe’s “three arrows”, or the three major economic policies to revitalize Japan’s economy.

As the nation heads toward the target of ¥600 trillion in GDP, the tourism industry will definitely play a huge role. We think that a lot of business opportunities can be generated in tourism, in the MICE (meetings, incentives, conferences, exhibitions) industry for example. We have already taken some action. Last year, for example, Fuji Media Holdings acquired the Granvista Hotels and Resorts group, which owns and/or operates five properties in Hokkaido and 12 hotels and leisure facilities in other areas of Japan, including an aquarium. I think the tourism business is quite suitable for people like us working in the media industry, and it also appeals to the young and to the elderly.

 

With the number of US visitors passing 1 million last year, how are you hoping to attract and target further American visitors to the group’s hotels and other facilities?

Tourism is not just about people’s inflow, but about culture, nature, history, climate, food, people – there are many aspects to it. Japan has not yet fully developed a tourism culture. While Japan is a country that offers rich history, culture, and national treasures that we can boast to the world, we haven’t really developed an effective global public relations campaign. According to a book by David Atkinson, called “New Strategies for a Tourism-Oriented Country”, Japan’s inbound tourism is expected to grow to 56 million people by 2020, and then to 82 million people in 2030, with people coming from all corners of the world – Southeast Asia, U.S. and Europe. Regardless of how optimistic his figures may seem to be, I think Mr Atkinson has a good point: tourism is expected to become a major source of foreign revenue for Japan.

Just looking at last year, we saw huge numbers of Chinese visitors coming to Japan, their main purpose being to go on a shopping spree. The word ‘bakugai’ or ‘explosive buying’ by these Chinese shoppers became the buzzword of the year. The number of inbound visitors last year came very close to 20 million; we didn’t have to wait until the originally forecasted 2020 for that to happen. The government is certainly expecting this figure to rise and is now investing in various areas of infrastructure, such as airport facilities, to cope with the volume and also address the immigration policy.

Tourism, in general, could be described as one of the most rapidly growing industries in Japan. That is why I would like our group to take advantage of this trend and appeal tourism as a “media” business.

 

Can you take us through some of the ways in which Fuji Media Holdings is looking to nurture and grow new international relationships?

When we look at what we can offer globally, the word “content” is the essential element. Until recently, Japanese animations, or “anime”, were probably the strongest content in terms of worldwide marketing. But in the past, Fuji Television has had huge success with a reality entertainment program called ‘Iron Chef’, an exciting duel between famous chefs of different genres competing in a kitchen stadium using the same “theme ingredient”. This program is widely distributed and became so popular that localized versions and spin-off programs were created in the US as well as Europe.

Music and TV shopping are other areas to further develop international business. Since the TV shopping market in Japan is pretty much saturated, we’ve already crossed borders and collaborated with Southeast Asia and Taiwan business entities.

To go forward, I think one of our substantial strategies would be to create copyrights or intellectual properties that can be utilized and leveraged in other business operations.

 

Last year you signed a deal with Netflix in order to stream two series on their service. What has been the impact of this relationship so far and how do you hope to establish further similar partnerships in the future?

Netflix and Hulu represent another avenue for us to sell our content and we do not think of them as our competitors per se – as long as we are able to expose our content on their platforms, we are happy to collaborate. We have been asked to create several original programs for Netflix where we gain revenue through program production as well as from exploiting the rights that we have to the programs. Netflix was the first to agree to collaborate. If other players request the same, we will gladly provide them with our content.

People watch different content at different times of the day through various devices. We will collaborate when there is an opportunity available. The general idea of business collaboration with Netflix, for example, is that we look at these venues as another outlet to expose and sell our content. However, in terms of infrastructure, we don’t have any ownership or interest in Netflix nor Hulu.

That being said, we may enter into a similar platform business in the future. In fact, Fuji Television is the first TV station in Japan to start its own on-demand internet distribution service called FOD (Fuji TV On-Demand), and we already have over 800,000 subscribers.

 

What are your plans to grow awareness of the Fuji Media brand on a more global platform?

There are many ways and approaches to strengthen our brand and the power of our brand. One would be for Fuji Television to participate in movie and television festivals overseas and enter our content to prestigious awards such as the International Emmy Awards. We are aggressively pursuing these avenues. Through our programs and content that we create, we are spreading our station’s image and making our brand more apparent.

Another way is to expand our collaboration and network of partners. Our next task is to pursue further alliances in all our fields of businesses, and also to spread out from the domestic market to the international arena.

What do you consider personally to be your most successful moments in your extensive career?

It is hard to talk about my successful moments because it should be evaluated by others and not myself, but I shall say that I was fortunate to find myself in a developing country right after World War II, where the television industry was just starting up. At that time, I was a newcomer fresh out of college, and was able to jump into this unmapped and fascinating industry. Of course I felt a lot of pressure and some apprehension as well, as when you challenge anything new. However, I was able to overcome it all and forge my own path. I believed in myself and followed that path. I am very glad that I did, and I think this was the right path and the only path for me.

After college, all I wanted to become was a television journalist, which is why I joined Fuji Television and was happy to be assigned in the news department. In Japan however, there is a job rotation system within the company that can relocate you anywhere, and after a few years, the company transferred me onto a different path, the programming section. Yet, in retrospect, I think that I was fortunate, and the transfer turned out to be a good experience. If I were younger, I would do it all again.

 

What would you like to say as a final message?

The world is currently facing many issues and uncertain conditions – whether it be the United States’ presidential election, or with the European Union. What is certain is that there will be new leadership coming soon, and seeing how these new leaders tackle global issues will be interesting. In this world that is evolving and changing so fast, the role of print media becomes significant. Newspaper journalism is something that can give insight and direction to what is happening in the world. I think that those who read the newspapers are basically those who can think for themselves and who have imagination power.

Come 2020 when Tokyo hosts the Olympic and Paralympic Games, I would like people to recognize Fuji Television. I would like everyone to spot our headquarters with the giant silver sphere in Odaiba, situated in the center of the main venue for the Olympic Games, and recognize it as Fuji Television. We are the symbol of Japan’s entertainment spirit, with a creative passion to produce all genres of entertainment as well as serious news coverage.

Between now and 2020, people will be exposed to Tokyo on various occasions and opportunities, so I would like everyone to remember us. The Summer Olympic Games will take place in four years and an incredible amount of development will have taken place in the Odaiba area. By then, I imagine that Fuji Television will be more prominent as the industry’s leader and Fuji Media Holdings more powerful and influential as a global entity.

It would be our pleasure to welcome you to visit our headquarters in 2020. 



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