Microsoft Buys Into Cable TV Group in Japan
Microsoft Corp. said Tuesday it acquired a majority stake in Japan’s second-biggest cable TV company in an effort to expand the markets for its software beyond the company’s personal computer stronghold.
The Redmond, Wash.-based software giant bought a 60% stake in Titus Communications that had been held by the MediaOne Group, a U.S. cable TV company that is being acquired by telecommunications giant AT&T; Corp. Microsoft would not disclose financial terms.
The deal reflects the company’s efforts to push high-speed Internet access and interactive TV to a wider audience, said Hank Vigil, Microsoft’s vice president of consumer strategy.
Titus Communications, which has about 92,000 subscribers across Japan, has been developing a broadband network that allows users to surf the Web using cable television lines at speeds up to 25 times quicker than the fastest dial-up modems.
“There’s a lot of interest in Japan in the triple-play option of voice, high-speed data and interactive TV,” Vigil said. “Titus is well positioned to deliver those services.”
Cable television, however, is not as widespread in Japan as it is in the United States, reaching an estimated audience of 17% of households there, compared to more than 70% of U.S. homes. But Microsoft believes that the Japanese fascination with technology is about to embrace the Internet through high-speed networks.
Closely held Titus had $48 million in sales for the year ended March 31, 1999. The company doesn’t disclose profit. Microsoft shares fell $2.19, to $83.88 in Nasdaq Stock Market trading of more than 35 million shares.
Microsoft has been trying to expand its Windows franchise in PC software into a growing constellation of digital devices and Internet services. The software behemoth has spent billions on Internet- and broadband-related businesses to win market share for its products.
Four years ago, Microsoft’s outside investments totaled $650 million. Today they exceed $22 billion, according to a study by Gartner Group. Microsoft has about $18 billion in cash.
Bigger deals include a $5-billion investment in AT&T; to help put Windows CE on digital set-top boxes. Its $600-million investment in Nextel Communications was driven by a need to extend MSN.Com to wireless customers. The company also has a partnership with Qualcomm Corp. to create WirelessKnowledge, which will include Microsoft’s CE operating system in chips that power cell phones.
Despite such investments, however, Microsoft finds itself playing catch up to competitors.
“It’s a pretty difficult road for Microsoft because they face so many competitors in so many new markets that already have a big head start,” said Tom Taulli, a financial analyst for Internet.com. “Before, they dominated the PC market, but in the wireless and cable markets, for example, they face a congested field of companies that have big war chests.”
