Music Unit May Not Fit Into New Parent’s Plans : Recording industry: A sale is possible if the Japanese feel the division requires too much time, money and attention, an observer notes.

Having embraced high technology and Japanese electronics companies long before it became fashionable in Hollywood, it would seem that MCA Inc.’s music division might be highly prized by its new owner, Matsushita Electric Industrial Co.

But unlike rival Sony Corp., whose foray into Hollywood began with the purchase of CBS Records in 1988, some analysts believe that Matsushita may ultimately be more interested in MCA’s movie, theme park and television production operations than in MCA’s music business.

“Down the road, there’s a good possibility they could sell the record company,” said Stan Soocher, editor of Entertainment Law and Finance, a New York-based trade publication. “The Japanese tend not to be very hands-on” with entertainment concerns and prefer enterprises that don’t require close supervision, he said.

But as one of the smallest of the six major international record concerns, MCA could require a lot of time, money and attention to compete in the rapidly consolidating record industry. With entertainment marketing costs continuing to rise dramatically, Matsushita ultimately may sell MCA Records or buy other labels to increase market share and make the operation cost effective, experts say.

One big unknown, of course, are the details of Matsushita’s acquisition agreement with MCA.

MCA Chairman Lew R. Wasserman is said to have insisted that Matsushita not replace top MCA management for several years after the sale--a provision that could thwart any quick action on MCA’s record operations.

What’s more, MCA’s music unit has undergone extensive change in the past year. The Music Entertainment Group, which operates a concert promotion division as well as a highly profitable apparel and merchandising arm, acquired the Geffen rock music label and the GRP jazz label in April, and this month it signed a new three-year international distribution deal with Bertelsmann Music Group.

Yet reports have already surfaced that BMG, a unit of the Bertelsmann media conglomerate of Germany, is interested in acquiring MCA’s Music Entertainment Group. BMG says it has amassed $4 billion for entertainment and media-related acquisitions over the next few years.

Although MCA music chief Alvin N. Teller has recently denied those rumors, NV Philips, which owns 80% of Polygram Records, and Thorn-EMI, which owns SBK Records and Capitol Records in the United States, might also welcome the opportunity to buy market share to compete with the music industry’s two music giants: Sony and Time Warner.

And, in any case, some analysts say Matsushita’s acquisition of MCA and its music division would seem to be the perfect marriage.

“If I were a party to the discussions, I would value the record company and look to strengthen it,” said James I. Magid, senior security adviser at New York-based Needham & Co. Some of MCA’s record labels already have extensive experience working with Japanese consumer electronic companies, Magid and other analysts noted.

For instance, GRP Records--the first U.S. record label to sell prerecorded digital audio tapes as well as produce music videos in the state-of-the-art, high-definition television format--has made a corporate quest of marrying music “software” to leading-edge consumer hardware technology for more than a decade.

The ties to Japan grew closer this fall when MCA reached an agreement with JVC to create a new record company in Japan.

Those kind of links symbolize the strategy that Matsushita is believed to be after in acquiring MCA: to provide programming software to stimulate sales of Matsushita’s audio and video hardware.

Yet despite the fact that Matsushita owns 50% of JVC, Matsushita officials have not sought out MCA Records officials for consultation on the future development of music and audio hardware.

“I understand we’re certainly a small player in the picture,” mused GRP President Larry Rosen in an interview last month. “I think they (Matsushita) do recognize the knowledge that we have about the industry . . . and the importance that we can play from the standpoint of the MCA Music Entertainment Group. Somebody has to create the software for these new pieces of hardware.” But Matsushita officials, he quickly added, “haven’t called me for advice.”

The Companies At A Glance Matsushita Electric Industrial Co. Osaka, Japan-based Matsushita Electric produces an array of consumer electronics under several well-known brand names, including Panasonic, Technics, Quasar, National and JVC. Products range from stereos to electric shavers. Source: Value Line Revenue: Billions of dollars ‘88: $41.7 ‘89: 39l0 ’90 (est.): 43.5 MCA Inc. Assets of the Universal City-based entertainment company include Universal Pictures and film library, Universal Studios Tours, 420 acres of developed property at Universal City. WWOR-TVin Secaucus, N.J.; Yosemite Park & Curry Co., A27 Best of Everything shops, Putnam Publishing, Geffen Records and 49% of Cineplex Odeon. Revenue Billions of dollars ‘88: $3.0 ‘89: 3.4 ’90 (est.): 3.5