Matsushita Plays a Low-Key Role at MCA for Now : Entertainment: Most Japanese investors in Hollywood operate under similar rules, on the philosophy that American creativity is what makes its products so popular worldwide.

At MCA Inc.--the entertainment giant whose movies, records and theme parks help shape American popular culture--about 60 employees recently filed into a screening room for a talk on “group think,” the history of sushi and the role of consensus-building in Japanese management.

The wide-ranging discussion of Japanese business and culture ended with the MCA employees rising from their padded chairs and awkwardly bowing to one another.

It was all part of an effort to bridge the cultural gap between the executives and their corporate parent, Matsushita Electric Industrial Co.

In the year since it agreed to buy MCA for $6.59 billion, the manufacturing colossus has acted more like an extra in its own movie than the party behind the biggest takeover of an American company by a Japanese firm.

Indeed, sources say MCA remains much the same as it was: a conservatively run fiefdom of Chairman Lew R. Wasserman and his protege, President Sidney J. Sheinberg--a place where old men in dark suits still make multimillion-dollar deals with baby moguls in sweat suits.

Some MCA executives fear that that may change as Matsushita gets a better handle on the company. But for now, its background casting stands in sharp contrast to the leading role taken by Sony Pictures since its acquisition of Columbia Pictures Entertainment. In two years, once moribund Columbia has been remade in Sony’s flamboyant image--to the extent of being renamed Sony Pictures Entertainment.

On the MCA lot, Matsushita’s lone representative is a bespectacled executive named Atsuro Uede, a 25-year legal department veteran chosen for the job because of his grasp of English. Uede maintains a third-floor office in MCA’s black tower and attends some management meetings. But his duties are loosely defined; Uede’s business card vaguely titles him “MCA liaison.”

Joint MCA-Matsushita working groups have been formed to develop new technologies such as high-definition television and overseas theme parks. But there have been only four face-to-face meetings between top officers of the companies. MCA executives were led on a whirlwind tour of Matsushita that left one literally gasping. Matsushita has toured MCA twice.

An employee suggestion box has also been introduced at MCA, home to Universal Pictures, the Universal Studios theme parks and MCA Records. Under Japanese management procedures, the suggestions are supposed to be funneled to directly to MCA President Sheinberg--a prospect some employees find a bit intimidating, because Sheinberg is legendary for his hair-trigger temper.

And a Matsushita “global” newsletter keeps MCA employees abreast of such corporate advances as the “ozone friendly refrigerator compressor.” The newsletter also exposes them to the writings of Matsushita’s late founder, Konosuke Matsushita, a revered figure in Japan.

Those examples aside, however, the Osaka-based company behind Panasonic and other electronics products has substantially abided by its pledge to maintain the autonomy of MCA.

“Nothing has changed, not even the menu at the commissary,” said one top Hollywood executive who frequently lunches with Wasserman and Sheinberg on the MCA/Universal lot.

Matsushita ensured the continued involvement of Wasserman and Sheinberg, who have nearly 90 years experience at MCA between them, by offering lucrative five-year employment agreements.

Once considered Hollywood’s most powerful figure for his vast reach into entertainment and government, Wasserman declined to be interviewed. But fellow executives say he remains active in company affairs at age 78.

Wasserman has called several top lieutenants on the carpet recently about spending. It’s unclear if that’s the result of general economic woes--an industrywide recession has cut into MCA’s core businesses--or pressure from Matsushita to be more thrifty.

Financial analysts still regard Matsushita’s $66-per-share purchase of MCA as a good business move, despite the recent downturn in the entertainment business.

Jeffrey Logsdon, of Seidler Amdec Securities in Los Angeles, said MCA’s basic worth has not been diminished by the recession, thanks largely to the value of its library, which includes such classic films as “Frankenstein,” “Jaws,” and “E.T.--The Extra-Terrestrial.”

At the same time, analysts have virtually no access to financial information on MCA now that it is no longer publicly traded. Harold Vogel, an analyst with Merrill Lynch in New York, said the arrangement allows MCA to “hide behind the corporate veil” of Matsushita.

Boris Petersik, an analyst with Barclay’s de Zoete Wedd in Tokyo, projects that Matsushita’s earnings will drop 23% in fiscal 1991, mostly because of weaker sales of electronics products. MCA is expected to depress Matsushita’s earnings for a few years, Petersik said.

In a telephone interview, Sheinberg said the companies are still exploring ways to make the best of their combined resources. The 56-year-old executive said the relationship “holds the promise of productivity” but argued that it’s foolish to judge its success so soon.

Like newlyweds who didn’t know each other very well to begin with, both sides are still getting acquainted. The roof nearly blew off MCA’s black tower recently when one of Matsushita’s emissaries suggested making some changes in accounting procedures. MCA executives had to be told that the Japanese system of management encourages such initiative.

The future seems to hold more promise for the partnership. A joint-venture Japanese theme park is in the planning stages.

And like archrival Sony--which purchased Columbia Pictures Entertainment for $3.4 billion in 1989--technology is also a top priority for Matsushita. Matsushita and MCA executives have combined forces on a new delivery system for movies on airplanes.

Even before its acquisition of MCA, Matsushita was working with Shochiku, a Japanese theater company, on a string of small theaters that use video technology instead of film. Now, Matsushita says it is exploring ways MCA might contribute to this business.

One possibility is for Matsushita to develop high-definition television equipment to be used in the theaters. MCA’s movie library could then be converted to high-definition tape.

Sheinberg says he’s perfectly comfortable with MCA’s new working arrangement: “I find no fault with this relationship at all. And I’m too old and too rich to lie to anybody.”

At this time a year ago, Sheinberg and Wasserman were entering the final stages of intense negotiations with Matsushita. News of the discussions rocked Hollywood, which had already seen three other movie studios--20th Century Fox, MGM and Columbia--fall into foreign hands.

Matsushita was more than capable of making the deal. Though little known outside Japan, it is one of the world’s great industrial giants, with annual sales approaching $50 billion. Following on the heels of the Sony-Columbia deal, Matsushita-MCA represented a second opportunity to wed a leading maker of movies, records and television shows with a leading manufacturer of the machinery on which they play.

The deal’s mastermind was Creative Artists Agency Chairman Michael Ovitz, who also served as the matchmaker on the Sony-Columbia marriage. Discussions--set against the backdrop of an international money crunch and the Gulf crisis--nearly collapsed several times. But they were resurrected Thanksgiving weekend, and an agreement was reached after a marathon MCA board meeting in New York on Nov. 25.

A sensitive matter that remains unresolved from the Matsushita-MCA deal is Matsushita’s relationship with Israel. Matsushita was listed late last year among the companies that comply with an Arab-led business boycott of Israel. The disclosure did not threaten the deal but did embarrass all sides, because Wasserman is a leading supporter of Israel.

Jewish leaders give confusing accounts of Matsushita’s status. It no longer appears on the boycott list, purportedly because its products are available in Israel through independent agents. But Matsushita still makes no direct investment in Israel, supposedly the grounds for inclusion on the list.

“The first step is to sell your products, so we’re pleased that they at least sell,” said Will Maslow, who tracks the boycott for the American Jewish Congress. “However, that’s not the end of everything.”

Matsushita has been silent on the matter--and virtually everything else concerning MCA. At a recent press conference, Matsushita President Akio Tanii said the company’s low profile with regard to its American holding is intentional. Management of MCA will be left “to the experts,” Tanii said. “Wasserman’s philosophy is close to our own, so we are very friendly towards each other.”

Most Japanese investors in Hollywood operate under similar ground rules, on the philosophy that American creativity is what makes American entertainment so popular worldwide. Japanese business experts say it’s too early to predict how the relationships ultimately will play out.

Historically, however, the Japanese have taken control of businesses after learning them.

“It happened in the car business and the construction business,” said Robert Dzuibla, an attorney who specializes in Japanese business at the law firm Jones, Day, Reavis & Pogue. “The Japanese typically will let their managers observe an operation for two to four years, or until they feel comfortable they understand it. Then they exert full control.”

MCA’s movie division, Universal Pictures, is where many people will ultimately look for evidence of Matsushita’s hand. Tanii caused a minor uproar shortly after the merger, when he said he would be opposed to Universal making films with an anti-Japanese bias.

At the time, Universal had in development a project about an American’s experiences playing baseball in Japan. The Tom Selleck movie, “Mr. Baseball,” went through several script revisions. But people connected with the project say there was no interference from Osaka.

“It’s our understanding,” studio chief Tom Pollock said, “that what Matsushita wishes is for all executives at MCA to use their best judgment as to how to run a software company.”

Citron reported from Los Angeles and Helm from Tokyo.