MCA to Build a Universal Studios Theme Park in Japan

MCA Inc. on Monday confirmed that it will go ahead with plans to build a Universal Studios theme park in Osaka, Japan, its first outside the United States.

MCA originally disclosed plans for the park in 1994. But the project came under an extensive review after liquor giant Seagram Co. bought 80% of MCA last year from Matsushita Electric Industrial Co. Ultimately, Seagram Chief Executive Edgar Bronfman Jr. and MCA President Ron Meyer decided to give the project the green light.

MCA will hedge its bet by taking only a 17% stake in the project, called Universal Studios Japan. Another 17% will be held by Britain’s Rank Organisation, which is MCA’s partner in Universal Studios Florida and its expansion.

Sources said the reason for the 17% figure is that it gives the two companies a combined stake of more than one-third, which under Japanese law is enough to give them veto power over any decisions they don’t like. Sources close to the deal said it is unusual for foreign investors to be granted such a large stake in a project.

The remaining equity will be held by the city of Osaka and a number of Osaka-based industrial companies, banks and trading firm.

The project is one of the first major MCA international projects to get approval from Meyer. The proposed 140-acre theme park had been the source of much internal squabbling between MCA’s previous management team--led by former Chairman Lew Wasserman and former President Sidney Sheinberg--and Matsushita executives when the Osaka-based industrial company owned all of MCA.

Sources said Matsushita executives at one point capped MCA’s involvement at no more than 5%, annoying MCA executives who wanted a larger piece of the project.

Sources said the project--like most pending MCA deals--came under scrutiny after Seagram bought the company.

“There was major independent due diligence by people from Seagam and the entire new management at MCA. They did a thorough analysis of the project,” said one source involved in the project. However, the source added that the theme park was never in real danger of being scrapped, in part because Bronfman believes that Asia is one of MCA’s most fertile areas for growth.

Walt Disney Co. has done well with its Tokyo theme park. But the company’s arrangement with Tokyo Disneyland involves only licensing and management of the park, whereas MCA’s deal will involve an ownership position. MCA won’t manage the park, but it is expected to contribute several executives to the project and monitor its development. Steven Spielberg, who directed such hit movies for Universal as “Jurassic Park” and “E.T.--The Extraterrestrial,” will serve as a “creative consultant” on the project.

Universal Studios Japan is expected to resemble Universal Studios projects in the United States, with attractions based on such Universal movies as “Backdraft,” “E.T.,” “Jurassic Park” and “Back to the Future.”

The project will cost an estimated $1.6 billion to build and is scheduled to open by early 2001. All told, the cost for the land, environmental cleanup and public works projects to support the development could reach $5 billion, sources said.

Construction is expected to provide a major boost to Osaka’s west end. Developers also hope that Universal Studios Japan will eventually include facilities for film and TV production.