Telecommunications

March 2005

Government Mulls 20% Cap On Foreign Ownership Of Broadcasters
A proposed revision to the Radio Law finalized by the Ministry of Communications would limit the combined direct and indirect foreign ownership of a Japanese broadcaster to 20% of the company's voting rights. After receiving the approval of the ruling parties, the Communications Ministry will submit the revised legislation to the Diet by mid-April. Under current law, direct investment by overseas interests in a broadcasting firm is limited to 20% of the voting rights. Broadcasters violating this rule face having their licenses revoked. But no regulations are in place regarding indirect investments, including taking stakes in a domestic company that has a broadcasting unit. To finance its massive acquisition of Nippon Broadcasting System Inc. shares, Livedoor Co. issued convertible bonds to Lehman Brothers Japan Inc. Were Lehman to convert the bonds into stock, it would become the Web portal operator's top shareholder. Concerns about indirect foreign ownership were spreading in light of such scenarios. (The Nihon Keizai Shimbun, March 31, 2005)