Watching Sony Corp. fend off a barrage of criticism over its purchase of Columbia Pictures Entertainment Inc. last fall, Matsushita Electric Industrial Co. couldn't help taking a stab at its brash young competitor.
"We too have been asked by Japanese banks to buy U.S. film companies," Matsushita Executive Vice President Shoji Sakuma was quoted as saying then. "But we have refused offers because we thought the movie industry was something special to Americans."
Now, as Matsushita considers the purchase of entertainment conglomerate MCA Inc. for as much as $7.6 billion, it may find itself playing Sony's part and writing itself a new script.
"I'm not at all sure there is anything special about the film industry; many Americans have told me there isn't," one Matsushita official said Wednesday, admitting that the reaction of the American public is a consideration in the talks. "Depending on the method of acquisition, the reaction would be different."
Matsushita would maintain existing management and avoid layoffs, making its approach more acceptable in the United States, the official said.
The electronics company's change in attitude underscores the difficulty that the Japanese government is having in getting industry to avoid buyouts that might anger the American public and complicate trade relations.
The discussions also indicate that although Japan's stock market drop and higher interest rates may have cooled interest in U.S. stocks, bonds and real estate, it has not significantly slowed corporate Japan's pursuit of American companies.
"You will see less of the highly leveraged finance company buying up real estate in the U.S.," said one U.S. investment banker based in Japan. However, he added, "where there are strong business reasons for making a (corporate) acquisition, they will go ahead."
And where there are strong business reasons, Japanese corporations are unlikely to let U.S. public opinion deter them.
Instead, to avoid conflict, Japanese companies are increasingly trying to hide their involvement in U.S. deals by using shell companies and declining to talk to the press. That was the case in the recent acquisition by a Japanese concern of Pebble Beach Co., owner of prestigious golf courses and other properties on the Monterey Peninsula.
Japanese acquirers are also trying to put their actions in a more positive light, arguing that U.S. companies are initiating the deals because they appreciate the Japanese buyers' proclivity to invest for the long term.
It doesn't always work. Masaaki Morita, vice president of Sony Corp. of America and brother of Sony Chairman Akio Morita, tried to put the furor over the Columbia Pictures acquisition behind him by announcing earlier this year that the company would "return to its mainstay electronics business and move away from mergers and acquisitions." Nevertheless, Sony's purchase of Columbia has become a symbol of what critics call Japan's "buying up of America."
It is unclear if Matsushita is ready to put up with the kind of criticism Sony faced, risking a tarnished reputation for the broad array of products it sells in the United States under such labels as Panasonic and Quasar.
"Matsushita is a conservative company," says Masatomo Azuma, analyst at Yamaichi Research Institute. "If there is too much controversy, they could pull out. They don't want to make waves."
Yet, the acquisition may prove too tempting to resist. Investors, at least, think that there is a good case to be made. Matsushita's American Depositary Receipts (the vehicle for buying its shares on the New York Stock Exchange) rose $2 to close at $122 Tuesday after the announcement. In Tokyo, the share price fell only after investors showed some skepticism over whether Matsushita would complete the deal.
Investors say Matsushita's purchase of MCA would give the company an important new growth area. "The entertainment business has more growth potential than the hardware side," says Takatoshi Yamamoto, an analyst at the Tokyo office of the U.S. securities firm Morgan Stanley & Co.
Other observers point out that with growth of videocassette recorders slowing, Matsushita needs a new product to fuel sales.
High-definition television, a new technology that promises to bring cinematic sharpness to television tubes, could fit the bill. But its commercialization is many years away.
Still, access to the video talents of a firm such as MCA would put Matsushita in a stronger position versus Sony in the transition to a new generation of video products based on high-definition television.