Japan Giants Get More Say Over Entertainment : NEWS ANALYSIS

The acquisitions by Sony Corp. and Matsushita Electric Industrial Co. of two of Hollywood’s crown jewels, Columbia Pictures and MCA, are likely to strengthen Japan’s hand in directing debates over key issues in entertainment.

While Sony and Matsushita are fierce competitors, they have a history of working closely together when they have interests in common. Sony Chairman Akio Morita and Matsushita founder Konosuke Matsushita, for example, jointly authored a book in 1976 about the need for reform in Japan.

The two companies were key participants in a television export cartel organized by the Ministry of International Trade and Industry in the 1960s. The cartel enabled Japan to price its televisions high in Japan while undercutting U.S. manufacturers.

And both companies worked together on a largely successful fight against the unitary tax, which assured American states stable revenues from foreign manufacturers but which Japanese companies considered unfair.

When Sony President Norio Ohga had dinner recently with Matsushita’s president, the two companies gave little importance to the meeting. “It is not unusual for the two to meet,” says Akira Nagano, a spokesman for Matsushita.

Further cooperation in the future should be expected. Take the introduction of digital audio tape: U.S. recording artists and songwriters have opposed the introduction of DAT recorders because they say the machines’ ability to make identical copies poses a potential threat to their copyrights.

While U.S. record companies have fought the trend by refusing to issue DAT tapes, Sony is already using part of its CBS Records library to put out such tapes in Japan to support sales of its recorders. A similar move by Matsushita would put weight behind the Sony move.

While both companies want to dominate the market for extra-clear, high-definition televisions, they are both in favor of speeding up the introduction of HDTV standards in the United States. Japan regards HDTV as critical to maintaining growth in the consumer electronics sector. The United States has delayed the introduction of standards partly in an effort to give U.S. companies an important role in the new market.

The consumer electronics giants could also influence trends in the entertainment industry. Sony has already set up a lot at Columbia to demonstrate its high-definition broadcast equipment and hopes eventually to persuade producers to make use of the technology. Matsushita, while a competitor to Sony in the broadcast equipment business, has a common interest in seeing video technology take over from film.

But the greatest fear of those familiar with Japan is that the two companies, both acutely conscious of the importance of maintaining a good image of Japan, will use their power to suppress unfavorable footage. Matsushita officials have denied that they intend to influence the content of MCA films and television programs.

However, if a Matsushita-owned studio were shooting “The Last Emperor” and wanted to show footage of the Rape of Nanking, says John Stern, senior representative of the Japan office of the American Electronics Assn., the scene might be toned down to assuage domestic criticism.

Japanese distributors of that film did try to edit out the section when they first introduced the film to their Japanese audiences. Only strenuous objections from the director prevented them from doing so. “It’s naive to assume there won’t be some form of self-censorship,” says Stern. “There is a Japanese saying, ‘If it smells, cover it up.’ ”

10 LARGEST JAPANESE ACQUISITIONS The proposed $6.13-billion purchase of MCA by Matsushita is the biggest takeover ever of a U.S. company by a Japanese group. The following are the 10 previous largest Japanese acquisitions and investments in U.S. companies since 1987:

Price Acquirer Target (billions) Sony Corp. Columbia Pictures $3.4 Bridgestone Corp. Firestone Tire & Rubber Co. $2.6 Seibu/Saison Group Intercontinental Hotel Corp. $2.15 Sony Corp. CBS Records $2.0 Aoki Corp., Bass Group Westin Hotels & Resorts $1.53 Dai-Ichi Kangyo Bank Ltd. CIT Group* $1.28 Nippon Mining Co. Gould Inc. $1.1 Mitsubishi Corp. Aristech Chemical Corp. $0.873 Paloma Co. Rheem Manufacturing** $0.850 Mitsubishi Estate Co. Rockefeller Group Inc. $0.846

*Parent company of CIT was Manufacturers Hanover

**Parent company of Rheem was Pace Industries Inc.

Source: Assoicated Press