TV Asahi wants to ally with IT firm this year

By Mariko Katsumura and Noriyuki Hirata

TOKYO (Reuters) - Japanese private broadcaster TV Asahi Corp aims to ally with an information technology and telecoms firm by the end of the year and is open to a capital tie-up, its president said.

Such an alliance would be in line with TV Asahi's move to seek new revenue sources outside its traditional television business as falling advertising revenue and a decline in TV viewing put a lid on its business growth.

Last month, TV Asahi injected $226 million into its parent company, the Asahi Shimbun, buying nearly 12 percent of the newspaper to shore it up in the face of rising competition. At that time, it also said the Asahi group would consider a bold alliance with a third party that would help with new businesses.

"The alliance could be just setting up a new company or exchanging staff, but a capital tie-up is also an option," TV Asahi President Masao Kimiwada told Reuters in an interview on Friday.

"We want to ink a deal as soon as possible. The end of the year might be too late," he said. He declined to provide details including names of companies that TV Asahi has been talking with.

Kimiwada also declined to comment on whether prospective partners included Softbank Corp Japan's third-largest mobile phone operator, which has raised its profile in the cellphone business with an aggressive marketing strategy.

With sponsor companies spending more on Internet or search engine-linked marketing, Japanese broadcasters are trying to reduce their reliance in advertising revenues, seeking new profit drivers in non-broadcasting areas such as movies, DVD sales and TV program sales to overseas broadcasters.

Shintaro Kubo, the president of another major Japanese broadcaster, Nippon Television Network told Reuters in an interview last month that the company was experiencing an advertising sales slump and seeking alternative revenue sources.

NON-BROADCASTING BUSINESS

Kimiwada said TV Asahi had experienced "extremely bad" business conditions in the first quarter ended June 30, hit by falling advertising revenues as clients trimmed budgets in the face of rising raw material and oil prices and sluggish consumer spending.

Sponsor companies' advertising spending for the Beijing Olympics has been unexpectedly weak, as firms have curbed their marketing efforts following a wave of bad news out of China including the earthquake in Sichuan and unrest in Tibet.

TV Asahi's spot commercial revenue, which is not linked to particular programs and makes up about 52 percent of its overall commercial revenue, fell about 10 percent in the April-June quarter compared with the same period last year, Kimiwada said.

That so far undershoots the company's forecast for spot commercial revenue to increase 0.7 percent for the April-September fiscal first half.

TV Asahi's time commercial revenue, from those commercials aired during particular programs, was likely flat or increased slightly in April-June, Kimiwada said.

To cope with slumping revenue, Kimiwada said TV Asahi plans to cut its annual program production costs from the currently planned 93.3 billion yen, though he did not elaborate.