Sony buys mid-sized Japanese ad agency

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TOKYO -- Sony Corp., the consumer electronics giant, will take a 70% stake in Tokyu Agency International (TAI), Japan's 21st largest ad agency and a sister company of Tokyu Agency, Japan's third largest advertising agency after Dentsu Inc. and Hakuhodo Inc.

Currently, TAI is owned by Tokyu Group (51%), Sony and Honda (12.5% each) and the foreign advertising agency D'Arcy Masius Benton & Bowles (24%). Tokyu Agency had 1995 billings of $1.8bn, while TAI had 1995 billings of $351m.

Sony, which is TAI's biggest client, plans to change the name of agency in April or May. Sony will also install a new president and a number of senior executives to take charge of TAI. There are reports that Sony has approached a long-time Dentsu executive to head TAI.

One of major reasons why Sony has decided to acquire an advertising agency is to prepare it for advertising the Internet and on the coming era of digital multi-channel television. Sony also plans to be a major share holder in the Japanese satellite TV venture, JSkyB, which was established as a joint venture by News Corp and Softbank last December. JSkyB plans to start broadcasting a 150-channel service from April '98. Softbank and News Corp have recently agreed with Sony that each of the companies will own a third of JSkyB. Sony already owns the major U.S. movie studio, Sony Picture Entertainment.

Other areas of Sony's operations which would benefit from an ad agency with digital expertise include Sony Music Entertainment and Sony Computer Entertainment, which markets the PlayStation video games console. Both those companies also have a lot of content which can be utilized under digital multi-channel broadcasting business as well as hardware business under the Sony brand.

Copyright March 1997, Crain Communications Inc.

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