Business Report 2004

Transcription

TV TOKYO Corporation
ANNUAL REPORT
2004
For the Year Ended March 31, 2004
Pokémon AG
Yu-Gi-Oh!
Ii Tabi: Yume Kibun
Love & Mystery Drama
Kanteidan
Adomachikku Tengoku
Nikkei Special:
Gaia no Yoake
Dare demo Picasso
TV Champion
2004 WRC World Rally Championship
Saturday Special
Shinshun Wide Jidaigeki:
Ryoma ga Yuku
NARUTO
World Business Satellite (WBS)
Sports Damashii
Ganso Debuya
Contents
Yu-Gi-Oh!: © 1996 Kazuki Takahashi
Pokémon AG: © Nintendo, Creatures, GAME FREAK, TV TOKYO, ShoPro, JR Kikaku, © Pokémon
NARUTO: © 2002 MASASHI KISHIMOTO
TV TOKYO Corporation at a Glance ..................................... 2
Message from the President .......................................................... 4
TV TOKYO’s 40th Anniversary................................................... 7
Review of Operations
Broadcasting ...................................................................................... 8
Rights Management .......................................................................14
Financial Section....................................................................................17
TV TOKYO Group.............................................................................36
Corporate Data.....................................................................................38
Board of Directors and Auditors ................................................39
Investor Information ...........................................................................39
1
TV TOKYO Corporation at a Glance
Broadcasting
TV TOKYO is a media company whose primary business is
free-to-air, commercial network television broadcasting. Our
programming emphasizes originality, quality and vitality, while
our program production strengths lie in business news, anime
and entertainment. To complement our core broadcasting business, we have also developed a strategically important rights
management business, which involves the secondary use of program content and anime characters through the sale of videos
and DVDs, movie productions and the merchandising of toys,
games and other products. In recent years, our export business
has grown, driven in particular by overseas syndication of anime
programs and international merchandising of anime-related
products.
As outlined above, our business comprises two segments:
broadcasting and rights management. Through synergies created
between these two segments, we are striving to lay a platform
for sustained growth.
Rights Management
Content Revenues
The worldwide success of the Pokémon anime franchise, which
was first broadcast in Japan in 1997, became the trigger for TV
TOKYO’s rights management segment to grow into a major
business. This business is based on the secondary use of anime
program content and characters—produced in collaboration
with our business partners—involving video and DVD sales,
movie productions and merchandising of toys, games and other
products. Compared with Hollywood-style movies, the scale of
such projects is still relatively small, but as an industry in which
Japan maintains a competitive advantage, anime has become an
important export earner for the country.
In the period under review, content revenues totaled ¥6,802
million, an increase of 58.4%. In particular, the performance of
the Yu-Gi-Oh! franchise in the United States and Europe—where
it has become a major hit—contributed greatly to revenue
growth. Both Pokémon and Hamtaro saw theater movie releases,
which have now become an established part of the movie calendar. Apart from anime, this category also includes the joint
production and release of Japanese movies and the distribution
of foreign movies in Japan. (For more details, please refer to
page 15 of this report.)
Sales by Rights Management-Related Consolidated Subsidiary
TV TOKYO Music, Inc., is involved in the planning and production of theme music for TV TOKYO programs and other music
by many popular artists, as well as the publishing of such music.
The company is also a partner in the “Hello Project” centering
on pop idol group Morning Musume, which started out from an
audition program on TV TOKYO. Project activities include concerts, musicals and movie productions. The subsidiary posted
revenues of ¥3,892 million, a decline of 0.8%. (For more details,
please refer to page 15 of this report.)
Time and Spot Advertising Sales
TV TOKYO’s headquarters and directly owned and operated
television station are in Tokyo, which is at the center of the
Kanto broadcasting area comprising over 16 million households,
or around one third of the Japanese population. TV TOKYO is
also the lead station in the six-station TXN network, which covers all of Japan’s major urban areas. The other stations in the
network are TV OSAKA, TV AICHI, TV SETOUCHI, TV
HOKKAIDO and TVQ Kyushu. The combined coverage of the
six TXN stations is approximately 33 million households, or
about 70% of all households in Japan.
In the terrestrial television advertising market, there are two
main methods of advertising sales: time sales and spot sales.
TV TOKYO’s time sales comprise TXN network sales and
Kanto area-only local sales. Spot sales are made on a local basis.
In the year ended March 31, 2004, time sales totaled ¥57,098
million, a 1.7% decline compared with the previous period. Spot
sales amounted to ¥24,526 million, a 2.3% increase. (For more
details, please refer to page 12 of this report.)
Broadcast Satellite (BS) Sales
TV TOKYO holds a 14% equity stake in BS Japan Corporation,
the Nikkei Group’s commercial, free-to-air satellite broadcaster,
which commenced operations in December 2000. Our business
alliance with BS Japan includes (1) the joint production of dramas and other programs, and (2) the supply of news, anime and
entertainment programs, for which we partially conduct time
advertising sales. During the period under review, BS sales
amounted to ¥2,154 million, a 20.1% decrease compared with
the previous period. The total potential audience for BS Japan,
via direct-to-home (DTH) receivers and cable television, is over
five million households nationwide. (For more details, please
refer to page 12 of this report.)
Sales from Cash Syndication of Programs
TV TOKYO conducts cash syndication of its popular programs
to over 100 local terrestrial stations in Japan that lie outside the
TXN network coverage area. In addition, we conduct cash syndication to the various domestic DTH satellite and cable television
operators that began to gain market penetration in the mid1990s. We also conduct overseas cash syndication through distributors and media companies. Sales from cash syndication of
programs totaled ¥6,127 million, an increase of 13.0%. (For
more details, please refer to page 12 of this report.)
Sales by Broadcasting-Related Consolidated Subsidiaries
TV TOKYO has 12 consolidated subsidiaries within its broadcasting segment. These are TV TOKYO Medianet, Inc., which is
responsible for domestic and international cash syndication of
programs, TV TOKYO America, Inc., which performs news
gathering activities and operates a production studio in New
York, TV TOKYO Commercial, Inc., TV TOKYO Art Center,
Inc., TV TOKYO Lighting, Inc., TV TOKYO Systems, Inc., TV
TOKYO Production, Inc., Pronto, Inc., TV TOKYO Human, Inc.,
Technomax, Inc., TV TOKYO Building, Inc., and AT-X, Inc. These
subsidiaries accounted for combined sales totaling ¥8,386 million, a decline of 9.0%. (For more details, please refer to pages
12 and 36 of this report.)
Time 51.6%
Consolidated Net Sales
Events
1.3%
Content
6.1%
(For the year ended
bsidiaries
Rights Su
Event Revenues
An important way in which a terrestrial television station can
contribute to the community is through the promotion of cultural and sports events in its broadcasting area for the enjoyment
of its viewers. TV TOKYO organizes concerts, plays, musicals, art
exhibitions and sports events in the Tokyo area. Event revenues
during the period amounted to ¥1,447 million, a decline of
38.1%. (For more details, please refer to page 15 of this report.)
March 31, 2004)
3.5%
5.
5%
%
at
io
n
Spot 22.2%
%
1.9
Note: The percentages in this graph are based on net sales before adjustments for
intersegment transactions. These adjustments were as follows:
BS
C
as
h
Sy
nd
ic
2
ent 0.
nagem
a
M
s
Right
ting
Other
dcas 6%
a
o
r
7.
rB
Othe sidiaries
b
u
S
Millions of yen
Net sales, including intersegment ................................................................
Intersegment sales ................................................................................................
Total net sales.........................................................................................................
2
3
¥110,635
1,303
¥109,332
Message from the President
O
Sadahiko Sugaya
President
n April 12, 2004, TV TOKYO celebrated
the 40th anniversary of its first broadcast.
Making it an even more auspicious year for TV TOKYO,
the Company’s stock debuted on the First Section of
the Tokyo Stock Exchange on August 5, 2004.
Since the station’s launch in 1964 and its subsequent
transformation from an independent station serving the
Tokyo region to the lead station in a national network,
TV TOKYO has produced and broadcast a myriad of
popular programs. Our achievement of a successful stock
listing is thanks to the support of our shareholders, viewers, performers, advertisers and everyone else involved
with the station over our long history. On behalf of TV
TOKYO, I wish to take this opportunity to express my
sincere gratitude for this invaluable support.
Solid Results in a Watershed Year for Japanese Television
The operating environment for
Japanese television is now undergoing
a period of major change. In December
2003, TV TOKYO and its network
affiliate stations, along with other television networks, commenced terrestrial
digital broadcasts in Japan’s three largest
urban markets—Tokyo, Osaka and
Nagoya. This development heralds the
start of a new era of multimedia, multichannel broadcasting in Japan. To
respond appropriately to these changes
in the media environment, it is imperative to create content that is even
more attractive than we have produced
in the past. In program planning and
production, we adhere to three core
principles: originality, quality and vitality.
This is especially the case in the three
4
genres of business news, anime and
entertainment, which include our flagship programs and are synonymous
with the TV TOKYO brand. We will
continue to produce attractive
content, not only for terrestrial analog
broadcasts but also aimed at a wide
range of media, including satellite
broadcasting, digital formats and the
Internet. This content will be utilized to
generate revenue streams based on a
full array of business models, encompassing distribution, licensing, merchandising and movie production, enabling
us to maximize the synergies available
between our broadcasting and rights
management businesses.
In calendar 2003, according to data
published by Dentsu, Inc., advertising
expenditures in Japan totaled ¥5,684.1
billion. This was 0.3% lower than the
previous year and marked the third
consecutive annual drop in expenditures. Television advertising expenditures in calendar 2003 grew 0.7%, to
¥1,948.0 billion, which was its first rise
in three years. The first half of calendar
2003 saw harsh conditions for television advertising, as the war in Iraq and
various uncertainties led advertisers to
curtail expenditures and pare back
advertising budgets compared with the
robust level of the previous year, which
had been bolstered by the 2002 FIFA
World Cup™. In the second half of
calendar 2003, commercials for digital
consumer electronics and financial
and insurance services helped spark
a recovery in television advertising as
a whole.
In this operating environment,
TV TOKYO concentrated its efforts
on creating programs that emphasize
originality, quality and vitality, together
with a target of reorganizing at least
30% of its “golden time” (7 p.m.–10
p.m.) and prime time (7 p.m.–11 p.m.)
programming schedules. Through this
strategy of large-scale program lineup
renewal, we have successfully launched
several popular new shows. Our rights
management business, based around
our competitive strengths in the anime
genre, also performed well, further
cementing its position internationally.
As a result, consolidated net sales
for the year ended March 31, 2004,
increased 1.0%, to ¥109,332 million,
and operating income climbed 36.5%,
to ¥3,700 million. Net income rose
18.4%, to ¥1,024 million.
Net Sales
(Millions of yen)
(Years ended March 31)
150,000
120,000
90,000
60,000
30,000
0
2002
2003
2004
Operating Income and Operating Margin
(Millions of yen)
(%)
5,000
5.0
4,000
4.0
3,000
3.0
2,000
2.0
1,000
1.0
0
2002
2003
2004
0
Operating income
Operating margin
Strength in Program Production the Key to Long-Term Profitability
Currently, the Company’s profitability
is steadily rising. However, to further
capitalize on the TV TOKYO Group’s
collective strengths and achieve our
goal of an operating margin of 5% at
an early stage, we will need to develop
and implement a range of additional
strategies.
This will first of all involve further
bolstering our broadcasting business.
Our rights management, broadbandrelated and other peripheral businesses
are all derived from this business.
We will aim to create attractive content through the focused investment
of management resources in the area
of program production. While our
program schedule will continue to be
based on a general format, during
prime time we will concentrate on
entertainment programming, including
reality shows and other genres, in
which TV TOKYO has developed a
particularly strong reputation over
many years.
In other time slots, we will collaborate with advertisers and advertising
agencies to select target audiences and
develop and produce program content
for our established anime, reality shows,
sports programs and lifestyle shows.
By aggressively utilizing this advanced
program development model, we will
be able to provide advertisers with a
5
powerful vehicle for brand building and
product placement, and achieve a level
of effectiveness not possible using traditional spot advertising.
In the news programming area,
TV TOKYO is the core broadcaster
for the Nikkei Group. Our business
news programs and business-related
documentaries provide audiences with
highly reliable business trend information concerning Japan and the global
marketplace. By leveraging our capabilities in this area, we are uniquely able to
cater to the needs of higher-educated,
higher-income viewers. We intend to
maintain and enhance our offerings in
this area.
Message from the President
Continuing International Success in Rights Management
In rights management—our other main
revenue-generating area—we are
continuing to develop our globally
competitive position, principally based
on our anime-related operations. TV
TOKYO broadcasts more than 30, or
approximately half, of all new anime
programs shown on terrestrial television networks in Japan every week.
We are the broadcaster most closely
identified with anime in Japan and have
built a track record and brand to
strongly reinforce this position. To
achieve sustained growth in the anime
business, we have adopted a partnership-based strategy. By forging partnerships with manga artists, publishers,
anime production houses, advertising
agencies, video game software producers, toy manufacturers, movie studios
and other related participants, we are
able to spread risk among several partners while building a robust production
system. It also allows us to effectively
reap the synergies of our broadcasting
and rights management businesses
over an extended number of years.
Following on from the worldwide
success of the Pokémon franchise, in
recent years Yu-Gi-Oh! has also become
a major international phenomenon.
The latter was jointly produced by TV
TOKYO and first broadcast on the
TXN network in April 2000. After
rapidly gaining a huge following in Japan,
the series was then launched on network television in the United States,
regularly gaining top audience ratings
among anime shows. Currently, the
show is broadcast in over 60 countries
around the world, including major markets in Asia and Europe. The Yu-Gi-Oh!
franchise boasts a global merchandising
lineup, including popular card and video
games. In the summer of 2004, Yu-Gi-Oh!
was released as a feature-length anime
movie, opening in over 2,400 theaters
across the United States. In October
2004, we will begin broadcasting an
entirely original Japanese-language
version of the children’s program
Sesame Street, co-produced in Japan,
on the TXN network and BS Japan.
This internationally renowned program
will contribute to both our broadcasting and rights management businesses.
We will continue to maximize our
competitive advantage as the lead station in a terrestrial network by developing distinctive content, to further
bolster the synergies between our
broadcasting and rights management
businesses.
the revised Subcontract Law to keep
employees thoroughly informed
regarding the latest compliance issues.
In addition, to fully ensure the protection of viewers’ personal data, we
established the Personal Data
Protection Committee and appointed
an independent internal privacy officer
to audit individual departments in the
Company. In this way, we intend to
continue enhancing compliance systems
at TV TOKYO.
Since the Company’s founding, we
have developed a corporate culture
that emphasizes innovation and challenge. More recently, we have extended
these core values to focus on attaining
a high level of originality, quality and
vitality in our program production. By
doing so, even in an operating climate
characterized by rapid change, we have
a secure platform from which to work
for enhanced profitability. In these
endeavors, I look forward to the future
support of our shareholders and the
investment community.
Sound Corporate Governance
To fulfill our mission to the wider
community as a broadcaster and realize
stable, long-term growth in corporate
value, we recognize the importance of
good corporate governance as a key
management issue. By steadily implementing a range of policies, we are
working to enhance our corporate
governance systems. The strengthening
of our investor relations (IR) activities,
including timely and accurate information disclosure, is part of this ongoing
process. In the area of compliance, we
are conducting internal seminars on
new rules relating to the Law for the
Protection of Personal Information and
6
September 1, 2004
Sadahiko Sugaya
President
TV TOKYO’s 40th Anniversary
40th Anniversary Commemorative Programs
The station is broadcasting major 40th anniversary commemorative
specials covering a range of genres, including news, sports and entertainment. In addition to those programs listed below, we are planning
several others, such as the drama Shinkansen wo Tsukutta Otoko-tachi
(The men who built the bullet train), which is to be broadcast on
November 3, 2004.
40th Anniversary Events
TV TOKYO is holding a series of large-scale events and movie
releases to celebrate its 40th anniversary. In addition to the events
listed below, the play 8-nin no Onna-tachi (Eight women) will be
staged at Tennozu Isle’s Art Sphere Theater in Tokyo from
November 19 to December 12, 2004.
World Business Satellite (WBS) Project 4000
Launched in April 1988, WBS clocked up its
4,000th program on October 22, 2003. A special
edition on the world economy was broadcast live
from New York.
Art Exhibition: Monet and Renoir:
Two Great Impressionist Trends
Held from February 7 to May 9, 2004, at
Bunkamura The Museum in Tokyo. Organized in conjunction with
the Nihon Keizai Shimbun and others.
Claude Monet, The Railway Bridge at Argenteuil, 1873.
Rugby World Cup 2003
Held in Australia between October 10 and
November 22, 2003. TV TOKYO obtained exclusive rights for the broadcast of matches on terrestrial television, including Japan’s four group stage matches.
Movie: Quill
Directed by Yoichi Sai, this movie about the life of a
guide dog was released nationwide in March 2004
at Shochiku-affiliated theaters, attracting 1.73 million
viewers and achieving a box office gross of over ¥2.1 billion.
© Japan Rugby Football Union
Shinshun Wide Jidaigeki: Ryoma ga Yuku (New Year
special samurai drama: Ryoma goes forth)
Broadcast on January 2, 2004, from 2:00 p.m. to
11:55 p.m. Starring Somegoro Ichikawa, Rina
Uchiyama and Haruka Igawa. Gained an audience rating of 8.0%.
Play: Play Without Words
The season ran from June 25 to July 25, 2004,
at Theater Cocoon in Tokyo. Featuring British
choreography genius Matthew Bourne.
Exhibition: Kyoi no Daikyoryu Haku
(The amazing giant dinosaur exhibition)
Held from July 19 to September 12, 2004, at
Makuhari Messe in Chiba. Organized in conjunction
with the Nihon Keizai Shimbun and others, this exhibition included the
display of more than 40 dinosaur skeletons and 200 animal fossils,
showing the process of evolution.
First All Japan University Women’s Invitational
Ekiden
Broadcast live on February 15, 2004, from
11:55 a.m. to 2:00 p.m. The race started at the
Saitama Prefectural Government Office and progressed through
six stages and a total distance of 30 kilometers. Gained an audience
rating of 7.3%.
Movie: NARUTO
First broadcast as an anime series in October 2002,
NARUTO was adapted from the manga magazine
Weekly Shonen Jump. This is the first movie for the
NARUTO franchise, and was released in Japan through Toho-affiliated
theaters.
Akai Tsuki (Red moon)
Broadcast on May 5 and 6, 2004, this drama special,
based on a best-selling novel, starred Reiko
Takashima and gained audience ratings of 13.3% and
13.2%, respectively.
© Masashi Kishimoto, Scott/Shueisha, TV TOKYO, Pierrot
Nihon no Taxi Daiboken II
(Great Japanese taxi adventure II)
Broadcast on July 18 and 19, 2004, this documentary program follows a 100-day, 26,000 kilometer
journey from the southernmost tip of South America to New York.
Gained audience ratings of 9.5% and 7.9%, respectively.
Art Exhibition: Emile Galle
To be held January 22 to April 3, 2005, at the
Edo-Tokyo Museum, this exhibition commemorates
100 years since the artist’s death. Organized in
conjunction with the Nihon Keizai Shimbun and others.
7
Broadcasting
TV TOKYO broadcasts a wide range of programs
that emphasize originality, quality and vitality.
Shinshun Wide Jidaigeki: Mibu Gishi Den
(New Year special samurai drama: When the last sword is drawn)
8
Broadcasting
Program Production, Programming Schedules and
Audience Ratings during the Period
Ratings
Ratings are a standard measure of
audience size, which provide infor-
Average Household Audience Ratings
(%)
mation on how many and what type
10.0
of people are watching a particular
8.0
program or advertisement. Ratings
can be broken down by time of day,
6.0
sex, age group, occupation and
other criteria. In Japan, ratings infor-
4.0
mation is gathered and published by
2.0
0.0
Video Research Inc. Ratings may be
based on households or individuals,
2000
2001
Golden time (19:00–22:00)
Prime time (19 :00–23:00)
All day
(6:00–24:00)
2002
2003
2004
2000
2001
2002
2003
2004
8.6
7.7
3.6
8.2
7.3
3.4
8.4
7.9
3.7
8.0
7.3
3.6
8.3
7.7
3.6
but program performance is generally measured by household ratings.
In contrast, media buying by advertising agencies tends to focus on rat-
Our revised programming schedule for
the year ended March 31, 2004, included
a renewal rate of over 30% for golden
time and prime time programs. Consequently, we have produced several new
popular shows. Among these is the reality show Inaka ni Tomaro (Let’s stay in
the countryside), which is based around
the experiences of famous television
personalities who stay overnight with
ordinary families while travelling in rural
Japan. The show explores the traditional
elements of Japanese life and ways of
thinking and feeling—many of which
have been long forgotten by city
dwellers—as well as nostalgia for “the
good old days.” Another program to be
well received was Ganso Debuya
(Original big eaters), in which a team of
television celebrities visit cities and
towns throughout Japan seeking out
local culinary delights. They then cook
and consume these local treasures in
this original-format leisure show. Among
programs carried over from our previous regular lineup, Kanteidan (The
appraisers), Love & Mystery Drama,
Mokuyo Yoga Gekijo (Thursday foreign
film theater), Ii Tabi: Yume Kibun (Great
travel: In the mood to dream) and
Adomachikku Tengoku (Exploring famous
streets and districts) have all continued
strongly.
In the area of program specials, since
October 2003 we have been broadcasting programs to commemorate the station’s 40th anniversary. In addition to the
Daichoryu! Sekai Keizai (Great currents in
world business) series to mark the
4,000th edition of our flagship business
news program World Business Satellite,
Rugby World Cup 2003 and the First All
Japan University Women’s Invitational
Ekiden were also popular among viewers. Of all specials during the period, the
two highest rating programs were both
sports specials. Game seven of the 2003
Professional Baseball Japan Series
attracted an average rating of 20.0% and
recorded the entire series’ highest audience rating peak of 40.3%. An international club friendly soccer match, FC
9
ings based on the number of targeted individual viewers. In Japan,
there are no national ratings, but
instead ratings are provided for each
broadcasting area. TV TOKYO’s ratings are drawn from the Kanto area,
centered on metropolitan Tokyo.
Kanteidan (The appraisers)
(Tuesday, 8:54 p.m.)
Kanteidan was first launched on the
TXN network in 1994 and soon
became its flagship show. This onehour, ingeniously original entertainment series has grabbed much
limelight and is currently broadcast
on 30 stations nationwide.
Broadcasting
Prime time
Monday to Sunday, 7 p.m. to 11 p.m.
This time band usually has the
highest number of viewers each day.
Golden time
Within prime time, this is the particularly high viewing period of 7 p.m. to
10 p.m. Household ratings usually
peak between 8 p.m. and 9 p.m.,
when all age groups, from children to
the elderly, are watching television.
In the year ended March 31, 2003,
the average HUT from 8:00 p.m. to
8:59 p.m. was 68.5%, followed by
68.2% from 9:00 p.m. to 9:59 p.m.
Sunday HUT ratings are a few points
higher than those of weekdays.
Tokyo versus Real Madrid, achieved the
second highest rating of 16.9%.
TV TOKYO broadcasts more than
30, or approximately half, of all new
anime programs shown on terrestrial
television networks in Japan every week.
Based on program content and target
audiences, anime shows are mainly
broadcast on weekdays between 6 p.m.
and 8 p.m., on weekends in the morning,
and during late night slots. Our lineup of
anime shows for children, including
Pokémon AG, Hamtaro, NARUTO and
Yu-Gi-Oh!, receives high ratings.
As a result of the factors outlined
previously, our average ratings for the
period under review were: golden time
8.3%; prime time 7.7%; and all day 3.6%.
Both golden time and prime time
exceeded the average ratings recorded
in the previous fiscal period. In particular,
our golden time audience share rose to
10.8%. This was our highest audience
share for golden time since the year
ended March 31, 1999, and was despite
a long-term trend toward a lower percentage of households using television
(HUT) during this time.
We will continue to design our
programming schedules by focusing on
originality, quality and vitality, which will
involve both strengthening the content
of our existing programs and aggressively developing new programs.
All day
This is the average rating for Monday
to Sunday over the 18 hours between
6 a.m. and midnight. Although actual
broadcasts run almost continuously
24 hours a day in major urban areas,
such as Tokyo, the all day rating is
still commonly used as an index.
Ratings research covers all broadcast times.
High Average Rating TV TOKYO Programs during the Year Ended March 31, 2004
• Regular Programs
Ranking
1
2
3
4
5
5
Program name
Day
Kanteidan
Love & Mystery Drama
Mokuyo Yoga Gekijo
Ii Tabi: Yume Kibun
Adomachikku Tengoku
Inaka ni Tomaro
Tuesday
Wednesday
Thursday
Wednesday
Saturday
Sunday
Start time
Household
rating (%)
8:54 p.m.
8:54 p.m.
9:00 p.m.
9:00 p.m.
9:00 p.m.
7:00 p.m.
14.4
10.1
9.5
9.3
8.8
8.8
* The above table ranks programs broadcast between March 31, 2003, and March 28, 2004, according to average household rating.
Audience share
Audience share is the percentage
of the television viewing audience
(based on the total number of televisions in use for television viewing)
tuned into a particular station or
broadcast. TV TOKYO’s audience
shares for fiscal 2004 (52-week
average) were prime time 10.2%,
golden time 10.8% and all day 7.5%.
• Program Specials
Ranking
1
2
3
4
5
Program name
Start time
Household
rating (%)
6:00 p.m.
7:00 p.m.
8:54 p.m.
9:00 p.m.
9:00 p.m.
20.0
16.9
13.9
12.4
12.2
Date and day
2003 Professional Baseball Japan Series, game seven Oct. 27, 2003 (Mon)
Soccer: FC Tokyo versus Real Madrid
Aug. 5, 2003 (Tue)
Docudrama Special: North Korean Abductions May 14, 2003 (Wed)
Movie: Tora-San Goes to Vienna
Nov. 27, 2003 (Thu)
Otakara Sodatsu! TV Auction
Feb. 16, 2004 (Mon)
* The above table ranks programs broadcast between March 31, 2003, and March 28, 2004.
• Anime Programs
Ranking
1
2
3
4
5
Program name
Day
Pokémon AG
Mirmo Zibang
NARUTO
Hamtaro
Rockman EXE Axess
10
Thursday
Tuesday
Wednesday
Friday
Saturday
Start time
Rating for children
(aged 4–12, %)
Household
rating (%)
7:00 p.m.
7:30 p.m.
7:00 p.m.
6:30 p.m.
8:30 a.m.
29.6
26.1
18.9
17.3
16.6
8.3
7.1
7.9
6.1
5.5
Broadcasting
Television Advertising by Industry in the Kanto Region
(Unit: GRP fifteen-second equivalent)
Five-station combined total
(Thousands of points)
Industry
Industry’s
share of total (%)
TV TOKYO’s
industry share (%)
1.1
22.1
8.6
11.6
2.1
3.5
0.2
4.3
5.5
7.5
4.0
3.0
4.4
8.3
10.8
3.0
100.0
11.5
10.4
5.5
4.5
9.4
13.8
21.8
12.6
7.8
9.8
20.3
12.3
11.5
10.3
10.9
7.6
9.8
Energy and foundation materials
124
Food and beverage
2,425
Pharmaceuticals
949
Cosmetics and toiletries
1,276
Apparel and personal items
229
Publications
387
General industrial machinery
18
Precision office equipment
468
Home electric appliances and electrical machinery 603
Automobiles and transportation
822
Household goods and equipment
436
Housing and construction materials
328
Wholesale and retail
478
Finance and insurance
916
Services and leisure
1,188
Government, classified ads and others
331
Total
10,978
World Business Satellite (WBS)
(Monday–Friday, 11 p.m.–11:55 p.m.,
Saturday, 11 p.m.–11:45 p.m.)
Our flagship business news program
carries domestic and international
news as well as information on the
latest trends. WBS maintains an
average rating of over 4%, impressive for this type of news program.
* The combined total is for time and spot advertising broadcast by Japan’s five lead stations of national commercial networks: NTV, TBS, Fuji TV,
TV Asahi and TV TOKYO. The data is provided by Video Research, based on actual audience ratings. It is not based on ad-buying rates.
The Advertising Market in Japan (Source: Dentsu)
Japan is the world’s second largest
¥5,684.1 billion, a 0.3% decline com-
advertising market next to the United
pared with 2002, television advertis-
States. In calendar 2003, while adver-
ing expenditures rose 0.7%—the first
tising expenditures in Japan totaled
increase in three years.
Advertising Expenditures
by Medium
(Calendar 2003)
2.1%
0.7%
18.5%
Advertising Expenditures in Japan
(Billions of yen)
Calendar years
1999
Total advertising expenditures .......... ¥
2000
5,699.6 ¥
Nominal GDP..................................... 507,224.3
Advertising expenditures as a
percentage of nominal GDP (%).......
2001
6,110.2 ¥
2002
6,058.0 ¥
5,703.2 ¥
505,847.4
498,102.0
499,052.7
1.19
1.20
1.14
1.14
1,912.1
(Calendar years)
2,079.3
3.2%
34.1%
34.3%
1.12
2,500
2,000
5,684.1
511,462.4
Television Advertising Expenditures
(Billions of yen)
7.1%
2003
2,068.1
1,935.1
1,948.0
■ Newspapers
■ Magazines
■ Radio
■ Television
■ Sales promotion (combined)
■ Satellite media-related
■ Internet
1,500
In 2003, television advertising expen3,000
ditures totaled ¥1,948.0 billion, a
34.1% share of all advertising expen-
500
ditures. Television has had the largest
0
1999
2000
2001
2002
2003
11
share of any media since 1975.
Broadcasting
Time sales advertisements
Time sales refer to advertising time
sold for a particular time slot within
a specific program. Usually these
involve either 30-second or 60second slots and are based on a
three-month or six-month up-front
contract. Some programs are sponsored entirely by one company or
by a buying agency. For program
Summary of Results
Sales and Operating Income for the Broadcasting Segment
Years ended March 31
Broadcasting segment sales....................................................
Time sales.........................................................................................
Spot sales..........................................................................................
Terrestrial broadcasting total ................................................
Broadcast satellite (BS) sales .................................................
Sales from cash syndication of programs.......................
Other broadcasting subsidiaries’ sales..............................
Operating income .......................................................................
programs are sold individually. For
programs sold on a time basis, a list
2003
¥98,294
57,098
24,526
81,624
2,154
6,127
8,386
3,198
¥99,401
58,084
23,984
82,068
2,697
5,423
9,212
1,605
2002
¥100,450
56,173
25,449
81,623
4,888
5,503
8,434
2,386
Note: The sales totals in this table are before adjustments for intersegment transactions.
specials, such as large sporting
events and major one-off dramas,
(Millions of yen)
2004
(%)
Annual Growth in Time and Spot Advertising Sales
and Program Cash Syndication
20.0
15.0
of sponsors—which may be companies, products or brands—is
announced at the beginning and
end of the program. This type of
10.0
5.0
0.0
advertising has the added advantages of restricting each program to
-5.0
a single sponsor from any particular
-10.0
industry and giving advertisers regular access to a popular program or
a specific target audience that the
program is effective at attracting.
Depending on the area in which a
program is broadcast, advertisers
may buy local time or network time.
Local time refers to advertising slots
broadcast only in TV TOKYO’s
Kanto coverage area, while network
time refers to advertising slots that
are broadcast over the whole TXN
network, including TV TOKYO.
2000
Time Sales
Spot Sales
Cash Syndication
2001
2002
2004
2001
2002
2003
2004
1.1
2.4
4.8
5.6
7.0
7.0
-1.0
-3.8
9.8
3.4
-6.1
-4.0
-1.6
2.4
16.4
Time Sales
Time sales during the period struggled
to reach the level of the previous period,
which had been bolstered by the 2002
FIFA World Cup Korea/Japan™.
However, aggressive sales activities and
our flexibility in meeting advertiser
needs resulted in a decrease of just
1.7%, to ¥57,098 million. Advertising
demand increased for many of our regular programs. These included such
entertainment programs as Kanteidan
and Adomachikku Tengoku, anime programs, and high-quality business news
programs such as World Business Satellite
and Nikkei Special: Gaia no Yoake, which
attract higher-educated, higher-income
audiences. Inaka ni Tomaro and other
12
2003
2000
new programs launched during the
period gained solid support from advertisers. Sports specials also contributed
to sales. These included game seven of
the 2003 Professional Baseball Japan
Series and the Rugby World Cup 2003.
Spot Sales
Spot sales during the period rose 2.3%,
to ¥24,526 million. We achieved this
growth despite total spot sales by the
five commercial stations in the Kanto
area shrinking 0.3%. Analyzed by industry, digital consumer electronics and
services acted as the main advertising
driver during an economic recovery
that is being dubbed the “digital boom.”
Broadcasting
These included digital flat-panel televisions, DVD recorders, digital cameras
and mobile phone services. Spot sales
in the finance and insurance, automobiles and transportation, and housing
and construction materials categories
were also brisk. In the cosmetics and
toiletries category, which has in the
past been one of our weak areas,
advertisers have reassessed our cost
performance for target audiences,
which has led to an increase in
advertising sales.
Broadcast Satellite Sales
TV TOKYO has formed an alliance with
BS Japan to supply programs, and, for
some of these programs, we sell time
advertising. BS sales for the period
dropped 20.1%, to ¥2,154 million,
owing mainly to reductions in program
supply and commercial time. BS Japan’s
total potential audience as of March 31,
2004, was over five million households
and is projected to increase to ten million households by the end of 2005,
meaning its value as a national advertising medium is likely to grow in the near
future.
closely related to our rights management business, grew substantially.
During the period, sales from cash
syndication of the Yu-Gi-Oh! series were
particularly strong. This program
debuted in the United States in 2001
and is currently broadcast in over 60
countries worldwide. The Yu-Gi-Oh!
franchise is a TV TOKYO joint production for which we are the lead partner
in the development of the business.
This includes managing television
broadcast, video, merchandising and
other rights.
As a result of such robust growth in
cash syndication sales of anime programs to overseas markets, anime
comprises an 88.6% share of all overseas cash syndication sales. Thanks to
TV TOKYO’s efforts, Japanese anime is
receiving mainstream exposure around
the world, which is further expanding
the market for such content.
Spot sales advertisements
Unlike time sales, which involve an
advertising contract covering a specific program for a fixed period, spot
advertisements are sold by bundling
various spots scattered within and
between programs based on GRP.
The most common sales method
involves selling 15-second spots
spread over several weeks to form
a concentrated campaign in accordance with the advertiser’s budget
and target audience. In Japan,
advertising is not usually sold with a
guarantee of reaching a certain
audience demographic or number.
Sales are carried out separately for
each broadcasting area. TV TOKYO
only sells spot advertising for its own
broadcasts in the Kanto area.
Shinshun Wide Jidaigeki
(New Year special samurai drama)
Sales from Cash Syndication
of Programs
In Japan, syndication sales are mostly
obtained through cash syndication.
Barter syndication is not common.
Sales from cash syndication of programs increased 13.0%, to ¥6,127 million. Cash syndication to domestic local
terrestrial stations—our mainstay in this
category—grew a modest 2.1%, to
¥4,292 million. In contrast, cash syndication to overseas stations, which is
(January 2, 2 p.m.)
TV TOKYO produces big-budget
10-hour samurai dramas for broadcast every year on January 2. This
annual broadcast has become recognized as one of the major events in
the Japanese television calendar.
Average audience ratings were
12.6% for Chushingura (pictured
above) in 2003 and 8.0% for Ryoma
ga Yuku in 2004.
13
Rights Management
TV TOKYO’s world-class anime gives
its rights management business a global reach.
NARUTO
Poké
mon
AG
The Prince of Tennis
Hamta
ro
Hikaru
no Go
on
G Revoluti
Beyblade
Yu-G
i-Oh
!
The Prince of Tennis: © 1999 TAKESHI KONOMI/2001 NAS, TV TOKYO
NARUTO: © 2002 MASASHI KISHIMOTO
Pokémon AG: © Nintendo, Creatures, GAME FREAK, TV TOKYO, ShoPro, JR Kikaku, © Pokémon
Hamtaro: © Ritsuko Kawai/Shogakukan, SMDE, TV TOKYO
Hikaru no Go: © Yumi Hotta, HMC, Takeshi Obata, Noel/Shueisha, TV TOKYO, dentsu, Pierrot
Beyblade G Revolution: © Takao Aoki, BB3 Project, TV TOKYO
14
Rights Management
Summary of Results
Franchise Arrangements
Sales and Operating Income for the Rights Management Segment
Rights management segment sales ....................................
Content revenues........................................................................
TV TOKYO Music, Inc., revenues ......................................
Content-related revenues total...........................................
Event revenues..............................................................................
Other rights management revenues.................................
Operating income .......................................................................
2004
¥12,341
6,802
3,892
10,695
1,447
198
613
2003
¥10,773
4,294
3,922
8,216
2,338
217
1,227
(Millions of yen)
2002
¥12,075
6,210
3,869
10,079
1,810
185
1,552
Note: The sales totals in this table are before adjustments for intersegment transactions.
Our rights management segment may
be broadly divided into four businesses.
1. Licensing business mainly related to
anime franchises and the secondary
use of anime characters in videos,
DVDs, video game software, books
and other merchandising
2. Movie-related business, including
investment in movie production and
distribution and domestic distribution of foreign movies
3. Events business focusing on contributions to culture and the community, including the staging of concerts,
art exhibitions and sporting events
4. Music publishing business
In the table above, content revenues
mostly comprise the licensing and
movie-related businesses. The multi-use
of television program content is a key
strategy for TV TOKYO, allowing the
Company to expand its revenues
through its rights management business.
At the same time, we are strengthening
the TV TOKYO corporate brand by
creating opportunities for brand exposure outside the television medium.
For certain projects, such as the
Yu-Gi-Oh! and NARUTO anime
franchises, TV TOKYO acts as the
lead company within a partnershipbased business strategy. Under this
arrangement, TV TOKYO accrues
licensing revenues and, after carrying out its franchise management
functions, distributes profits to the
• Content Revenues
During the fiscal year under review,
content revenues climbed 58.4%, to
¥6,802 million. By utilizing TV TOKYO’s
strong brand identity as the broadcaster most closely associated with
anime in Japan, our licensing activities
have contributed to an increase in net
sales. As well as the jointly produced
Yu-Gi-Oh!, these activities include such
franchises as Hikaru no Go, The Prince of
Tennis and Shaman King. Yu-Gi-Oh! is
broadcast in over 60 countries, including the United States, the United
Kingdom, France, Germany and South
Korea. Merchandising related to these
programs is being vigorously undertaken in each country, encompassing
successful sales of card games, video
game software, DVDs, videos, toys and
other goods.
In our movie-related business, the
Japanese movie production and distribution category included the release of
Mibu Gishi Den (When the last sword is
drawn), which received the Best Picture
award at the Japanese Academy
Awards. This movie was based on a
television samurai drama first broadcast
by TV TOKYO in January 2002. Also
included in revenues for the period
under review were Dolls—directed by
15
other franchise partners. For this
reason, sales increase but operating margins decline. In such cases
as Pokémon, for which another
company acts as franchise lead
partner, the opposite is true since
much of the revenue we receive is
profit, thus bolstering our operating
margin. In either case, profit and
loss is significantly affected by the
relative success or failure of each
particular franchise and the profit
and loss distribution ratio held by
TV TOKYO for the franchise.
Yu-Gi-Oh!
(Wednesday, 6:30 p.m.)
Yu-Gi-Oh! started out in 1996 as
a popular manga in the magazine
Weekly Shonen Jump and crossed
over to a become a hit anime in
2000 when it was launched by
TV TOKYO on the TXN network.
Rights Management
Revenue Time Lags
In our licensing business, generally
there is a time lag between when a
program is first produced and
broadcast and when video, DVD
and merchandising businesses for
the franchise are developed. There
is another time lag between the
Takeshi Kitano, one of Japan’s leading
directors—the fifth movie in the
Pokémon series, and the first Hamtaro
movie. In the foreign movie domestic
distribution category, The Others, starring Nicole Kidman, and the major
French hit 8 femmes were booked
during the period.
domestic phase of such businesses
and the subsequent overseas
phase. In our movie-related business, we are involved in around 10
projects a year, either in jointly producing movies or jointly distributing
them. In this business, revenue
from each project is not booked until
14 months after the movie’s theater
release. Consequently, in our rights
management business, since copyrights are protected for a long
period and the business develops
over a similarly long period, several
years are required to determine the
ultimate success or failure of a project. A good illustration of this
process is the length of time a popular character retains its appeal
among many age groups. In contrast, in our broadcasting business,
advertising revenues, program pro-
• Event Revenues
Event revenues declined 38.1%, to
¥1,447 million, mainly owing to the
reduced number of major musical
events, such as tours by overseas
opera companies and musical groups.
The main events we held during the
period included our regular musical
production featuring Japanese pop
idol group Morning Musume, which on
this occasion was their first samurai
musical, called Edokko Chushingura.
With Nihon Keizai Shimbun, Inc.
(Nikkei), we jointly organized an art
exhibition featuring acclaimed nihonga
artist Kaii Higashiyama, which ran for
51 days and attracted 250,000 visitors.
In the sports genre, as part of the station’s 40th anniversary celebrations, we
held the First All Japan University
Women’s Invitational Ekiden.
duction costs and other related
costs are all booked at the time the
program is broadcast. In the case of
cash syndication of programs, with
the exception of overseas syndication, programs are usually broadcast by the purchasing station at the
same time as TV TOKYO or the
TXN network. Even when there is a
time lag, it is generally only a matter
of days or weeks, so revenues and
costs are booked relatively quickly.
• Music Publishing Revenues
Our consolidated subsidiary TV TOKYO
Music, in partnership with a talent
agency, is promoting an innovative business called “Hello Project.” This revolves
around Morning Musume, which
started out from a series of auditions
on the talent quest program ASAYAN
broadcast on the TXN network in
1997. Since then, Morning Musume
have developed into something of a
16
national pop music institution. The
group has developed a fruitful career
spanning numerous television series,
movies, CDs, DVDs and concert tours.
TV TOKYO Music also publishes theme
songs from TV TOKYO shows, performed by many different artists.
During the period under review, revenues slipped 0.8%, to ¥3,892 million.
As a result of the above factors,
particularly the synergy between our
broadcasting and rights management
businesses exemplified by our burgeoning overseas anime business, sales by
the rights management segment as a
whole increased 14.6%, to ¥12,341 million. Operating income for the segment
fell 50.0%, to ¥613 million, which was
largely attributable to an increase in
profit distributions to partners in our
joint anime production businesses.
By gaining the maximum benefit from
synergies between our broadcasting
and rights management businesses—
through the production of attractive
anime and other program content—we
aim to achieve stable and efficient profitability over the medium to long term.
Financial Section
Consolidated Financial Summary
TV TOKYO Corporation and Consolidated Subsidiaries
Thousands of
U.S. Dollars
Millions of Yen
2004
2003
2002
2004
For the year:
Net sales................................................................................................................................................................
Broadcasting ...................................................................................................................................................
Rights management....................................................................................................................................
Cost of sales........................................................................................................................................................
Gross profit..........................................................................................................................................................
Selling, general and administrative expenses ....................................................................................
Operating income............................................................................................................................................
Income before income taxes and minority interests...................................................................
Net income .........................................................................................................................................................
Capital expenditures ......................................................................................................................................
Depreciation and amortization ................................................................................................................
¥109,332
97,324
12,008
76,909
32,423
28,723
3,700
1,805
1,024
3,185
1,813
¥108,282
98,191
10,091
76,320
31,962
29,251
2,711
1,760
865
3,971
1,785
¥110,315
98,600
11,715
77,037
33,278
29,276
4,002
3,115
1,300
1,419
2,147
$1,041,261
926,894
114,367
732,472
308,789
273,551
35,238
17,195
9,756
30,335
17,262
At year-end:
Total assets ..........................................................................................................................................................
Total shareholders’ equity...........................................................................................................................
¥ 73,040
36,776
¥ 73,798
35,510
¥ 76,867
35,343
$ 695,624
350,250
Yen
Per share data:
Net income .........................................................................................................................................................
Cash dividends...................................................................................................................................................
¥ 50.59
15.00
¥
42.74
15.00
U.S. Dollars
¥ 366.93
75.00
$
Percentage
Ratios:
Return on assets ...............................................................................................................................................
Return on equity...............................................................................................................................................
Equity ratio...........................................................................................................................................................
1.4
2.8
50.4
1.1
2.4
48.1
1.7
3.7
46.0
Notes: 1. Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥105=U.S.$1 has been used, which was the approximate effective rate of
exchange on March 31, 2004.
2. On August 2, 2002, the Company effected a five-for-one split of common stock.
17
0.55
0.14
Management’s Discussion and Analysis
Net Income and Return on Equity
(Millions of yen)
(%)
1,500
5.0
1,200
4.0
900
3.0
600
2.0
300
1.0
0
2002
2003
■ Net income
● Return on equity
2004
0
Total Shareholders’ Equity and Equity Ratio
(Millions of yen)
(%)
50,000
100
40,000
80
30,000
60
20,000
40
10,000
20
0
2002
2003
■ Total shareholders’ equity
● Equity ratio
2004
0
Cash Flows
(Millions of yen)
(Year ended March 31, 2004)
6,000
4,000
2,000
0
-2,000
-4,000
■ Net cash provided by operating activities
■ Net cash used in investing activities
■ Net cash used in financing activites
■ Net increase in cash and cash equivalents
■ Cash and cash equivalents at beginning of year
■ Cash and cash equivalents at end of year
Income Analysis
In the year ended March 31, 2004, net sales increased 1.0%, to ¥109,332 million. Cost of
sales rose 0.8%, to ¥76,909 million, while selling, general and administrative expenses
decreased 1.8%, to ¥28,723 million. Consequently, operating income jumped 36.5%, to
¥3,700 million.
Other expenses amounted to ¥1,895 million. Although this included ¥141 million in
rent revenue and ¥310 million from gain on sales of investment securities, loss on devaluation of investment securities and golf memberships—including shares in BS Japan and
four other companies—totaled ¥2,194 million, and loss on disposal of property plant
and equipment, mainly relating to the conversion to digital technology, amounted to
¥127 million. As a result, income before income taxes and minority interests totaled
¥1,805 million, a 2.6% increase compared with the previous year. Net income for the
period grew 18.4%, to ¥1,024 million.
Financial Position
Total current assets declined ¥2,564 million, to ¥37,980 million, mainly owing to a
decrease in cash and bank deposits of ¥3,274 million. Total non-current assets rose
¥1,806 million, to ¥35,060 million, primarily owing to increases in equipment, vehicles
and software relating to the conversion to digital technology for terrestrial broadcasts.
Total current liabilities decreased ¥1,836 million, to ¥19,861 million, which was mainly
attributable to a ¥3,000 million reduction in unsecured bonds due for repayment within
one year. Total long-term liabilities increased ¥83 million, to ¥15,599 million. Included
within this amount was a ¥572 million increase in long-term debt, to ¥8,732 million.
Total shareholders’ equity rose ¥1,266 million, to ¥36,776 million. As a result, the
equity ratio increased 2.3 percentage points, to 50.4%.
Cash Flows
Net cash provided by operating activities amounted to ¥3,920 million, compared with
¥3,455 million in the previous period. This included a ¥45 million increase in income
before income taxes and minority interests, a ¥1,705 million increase in accrued
expenses and ¥1,327 million in income taxes paid, compared with ¥964 million in the
previous period.
Net cash used in investing activities totaled ¥3,799 million, compared with ¥4,842
million in the previous period. Significant items included payments for purchase of
property, plant and equipment of ¥1,584 million—mainly relating to the conversion to
digital technology in terrestrial broadcasting—and payments for purchase of investment
securities.
Net cash used in financing activities amounted to ¥2,985 million, compared with
¥3,283 million in the previous period. This included a ¥2,500 million increase in longterm debt and ¥4,965 million in repayment of long-term debt.
As a result, cash and cash equivalents at end of year amounted to ¥1,658 million,
compared with ¥4,522 million at the previous year-end.
18
Capital Expenditures
Capital expenditures during the period totaled ¥3,185 million, including ¥2,897 million
within the broadcasting segment. Most of this expenditure was focused on equipment
necessary for the December 2003 launch of terrestrial digital broadcasting, and in
particular transmission equipment, including digital master control facilities.
Risk Factors
• Reliance on the advertising market
In general, terrestrial television stations are highly dependent on advertising-derived
revenues. In the year ended March 31, 2004, advertising-related revenues (time
and spot sales) from TV TOKYO Group’s terrestrial television broadcasting business
accounted for 73.8% of consolidated net sales (before intersegment sales and
eliminations).
Based on historical data, there is evidence of a strong correlation between Japan’s
macroeconomic performance and the level of domestic advertising expenditures—
including television advertising. This relationship is also reflected in the tendency for
terrestrial television stations’ operating performance to be affected by economic conditions. By cultivating new advertisers and working to diversify its sources of revenue—
including through the strengthening of its rights management business—TV TOKYO
Group is striving to lay the platform for stable and sustainable growth. There is no
guarantee these efforts will be completely effective, however, meaning in the future
the Group’s financial condition and operating performance may continue to be
affected by trends in the advertising market.
• Legal restrictions on the proportion of shares held by foreign shareholders
According to article 5, paragraph 4 of the Radio Law, no broadcasting license shall
be granted to any company or group in which 20% or more of the voting rights are
controlled by non-Japanese nationals.
For this reason, article 52-8, paragraph 1 of the Broadcast Law stipulates that
private broadcasters whose shares are listed on a stock exchange shall refuse a request
to enter the name and address of a foreign shareholder on their shareholder register
if fulfilling such a request would cause the voting rights held by foreigners to equal or
exceed 20% of all voting rights.
Furthermore, if the ratio of voting rights held by foreigners reaches or exceeds
15%, in accordance with article 52-8, paragraph 2 of the Broadcast Law and article
17-3, paragraph 3 of the Regulations for Enforcement of the Broadcast Law, the
broadcaster shall disclose this ratio.
As of May 31, 2004, the ratio of voting rights in TV TOKYO held by foreigners
was 3.00%.
19
Capital Expenditures and
Depreciation and Amortization
(Millions of yen)
5,000
4,000
3,000
2,000
1,000
0
2003
2002
■ Capital expenditures
■ Depreciation and amortization
2004
Consolidated Balance Sheets
March 31, 2004 and 2003
Millions of yen
Thousands of
U.S. dollars (Note 3)
2004
2003
2004
ASSETS
Current assets:
Cash and bank deposits (Note 4)..................................................................................................................................
Notes and accounts receivable .......................................................................................................................................
Allowance for doubtful accounts....................................................................................................................................
Inventories (Note 6)..............................................................................................................................................................
Deferred income taxes (Note 10)................................................................................................................................
Other current assets..............................................................................................................................................................
Total current assets .........................................................................................................................................................
¥01,658
21,115
(54)
13,597
774
890
37,980
¥04,932
19,559
(53)
14,638
648
820
40,544
$015,786
201,101
(516)
129,496
7,370
8,481
361,718
Non-current assets:
Property, plant and equipment, net of accumulated depreciation (Note 7) ........................................
Investment securities (Note 5)........................................................................................................................................
Other assets................................................................................................................................................................................
Allowance for doubtful accounts....................................................................................................................................
Total non-current assets ...............................................................................................................................................
Total assets ....................................................................................................................................................................
18,116
7,357
3,501
6,086
(0)
35,060
¥73,040
18,395
7,059
3,068
4,856
(124)
33,254
¥73,798
172,538
70,069
33,341
57,963
(5)
333,906
$695,624
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Notes and accounts payable.............................................................................................................................................
Short-term debt (Note 9)..................................................................................................................................................
Accrued income taxes..........................................................................................................................................................
Accrued expenses...................................................................................................................................................................
Other current liabilities.........................................................................................................................................................
Total current liabilities ....................................................................................................................................................
¥04,180
2,029
1,160
4
8,672
3,816
19,861
¥05,369
5,295
475
4
6,970
3,584
21,697
$039,809
19,319
11,046
40
82,596
36,341
189,151
Long-term liabilities:
Long-term debt (Note 9) ...................................................................................................................................................
Accrued retirement benefits (Note 11).....................................................................................................................
Accrued retirement benefits for directors and statutory auditors..............................................................
Other long-term liabilities...................................................................................................................................................
Total long-term liabilities...............................................................................................................................................
Total liabilities......................................................................................................................................................................
Minority interests............................................................................................................................................................................
8,732
6,336
469
62
15,599
35,460
804
8,160
6,665
601
90
15,516
37,213
1,076
83,157
60,344
4,466
595
148,562
337,713
7,661
6,785
5,344
24,136
6,785
5,344
23,460
64,619
50,893
229,876
524
(13)
36,776
(81)
2
35,510
4,988
(126)
350,250
Shareholders’ equity:
Common stock, no par value—
Authorized shares, 74,580,000 in 2004 and 2003
Issued shares, 18,645,000 in 2004 and 2003 ....................................................................................................
Additional paid-in capital .....................................................................................................................................................
Retained earnings (Note 12) ............................................................................................................................................
Net unrealized holding gains (losses) on investment in securities, net of a tax charge of
¥357 million ($3,851 thousand) in 2004, and a tax credit of ¥54 million in 2003 ........................
Foreign currency translation adjustment ....................................................................................................................
Total shareholders’ equity............................................................................................................................................
Contingent liabilities (Note 14)
Total liabilities and shareholders’ equity ..............................................................................................................
The accompanying notes are an integral part of these financial statements.
20
¥73,040
¥73,798
$695,624
Consolidated Statements of Income
For the years ended March 31, 2004 and 2003
Millions of yen
2004
Net sales..............................................................................................................................................................................................
Cost of sales ......................................................................................................................................................................................
Gross profit ..........................................................................................................................................................................
Selling, general and administrative expenses (Note 13) ..........................................................................................
Operating income.............................................................................................................................................................
Other income (expenses):
Interest and dividend income ...........................................................................................................................................
Interest expenses.....................................................................................................................................................................
Equity in income of affiliates ..............................................................................................................................................
Loss on disposal of property, plant and equipment ............................................................................................
Rent revenue..............................................................................................................................................................................
Gain on sales of investment securities.........................................................................................................................
Loss on devaluation of investment securities and golf memberships........................................................
Other, net ....................................................................................................................................................................................
Income before income taxes and minority interests....................................................................................
Income taxes (Note 10):
Current ..........................................................................................................................................................................................
Deferred .......................................................................................................................................................................................
Minority interests in income of consolidated subsidiaries.......................................................................................
Net income ..........................................................................................................................................................................
¥109,332
76,909
32,423
28,723
3,700
2003
¥108,282
76,320
31,962
29,251
2,711
21
2004
$1,041,261
732,472
308,789
273,551
35,238
64
(344)
32
(127)
141
310
(2,194)
223
(1,895)
1,805
62
(397)
(0)
—
238
—
(1,156)
302
(951)
1,760
612
(3,278)
302
(1,215)
1,347
2,952
(20,891)
2,128
(18,043)
17,195
2,011
(971)
1,040
1,369
(303)
1,066
19,159
(9,252)
9,907
259
¥001,024
171
¥000,865
Yen
Per share:
Net income per share...........................................................................................................................................................
Cash dividends paid— (Note 12)
To existing shareholders from the beginning of the year..........................................................................
Thousands of
2,468
$0,009,756
U.S. dollars
2004
2003
2004
¥50.59
¥42.74
$0.48
15.00
15.00
0.14
Consolidated Statements of Shareholders’ Equity
Millions of yen
Number of
shares of
common stock
(Thousands)
Balance at March 31, 2002............................................................
Net income............................................................................................
Cash dividends paid ..........................................................................
Bonuses to directors.........................................................................
Net unrealized holding gains (losses) on
investment in securities................................................................
Foreign currency translation adjustments.............................
Balance at March 31, 2003............................................................
Net income............................................................................................
Cash dividends paid ..........................................................................
Bonuses to directors.........................................................................
Net unrealized holding gains (losses) on
investment in securities................................................................
Foreign currency translation adjustments.............................
Balance at March 31, 2004............................................................
Common
stock
Additional
paid-in
capital
Retained
earnings
(Deficit)
Unrealized
gains on
available-forsale securities
Foreign
currency
translation
adjustments
18,645
—
—
—
¥6,785
—
—
—
¥5,344
—
—
—
¥22,943
865
(266)
(82)
¥256
—
—
—
¥(15
—
—
—
—
—
18,645
—
—
—
—
—
¥6,785
—
—
—
—
—
¥5,344
—
—
—
—
—
¥23,460
1,024
(280)
(68)
(337)
—
¥ (81)
—
—
—
—
(13)
¥(02
—
—
—
—
—
18,645
—
—
¥6,785
—
—
¥5,344
—
—
¥24,136
605
—
¥524
—
(15)
¥(13)
Common
stock
Balance at March 31, 2003.................................................................................................. $64,619
Net income..................................................................................................................................
—
Cash dividends paid ................................................................................................................
—
Bonuses to directors...............................................................................................................
—
Net unrealized holding gains (losses) on investment in securities ...............
—
Foreign currency translation adjustments...................................................................
—
Balance at March 31, 2004.................................................................................................. $64,619
22
Thousands of U.S. dollars (Note 3)
Unrealized
Additional
Retained
gains on
paid-in
earnings
available-forcapital
(Deficit)
sale securities
$50,893
—
—
—
—
—
$50,893
$223,433
9,756
(2,663)
(650)
—
—
$229,876
$ (772)
—
—
—
5,760
—
$4,988
Foreign
currency
translation
adjustments
$ 14
—
—
—
—
(140)
$(126)
Consolidated Statements of Cash Flows
Millions of yen
Cash flows from operating activities:
Income before income taxes and minority interests...........................................................................................
Adjustments for—
Depreciation and amortization .................................................................................................................................
Equity in losses of affiliates...........................................................................................................................................
Provision for (reversal of) retirement benefits.................................................................................................
Interest and dividend income.....................................................................................................................................
Interest expenses ..............................................................................................................................................................
Loss on sales or disposal of property and equipment.................................................................................
Loss on devaluation of investment securities and golf memberships .................................................
Increase in trade receivables .............................................................................................................................................
Decrease in inventories........................................................................................................................................................
Decrease in trade payables................................................................................................................................................
Increase (decrease) in accrued expenses ..................................................................................................................
Decrease in customers’ advances ..................................................................................................................................
Other..............................................................................................................................................................................................
Sub total .................................................................................................................................................................................
Interest and dividend income received.......................................................................................................................
Interest expenses paid ..........................................................................................................................................................
Income taxes paid ...................................................................................................................................................................
Net cash provided by operating activities ..........................................................................................................
2004
2003
¥1,805
¥1,760
Thousands of
2004
$17,195
1,813
(32)
(329)
(64)
344
128
2,194
(1,556)
1,042
(1,189)
1,705
(101)
(234)
5,526
67
(346)
(1,327)
3,920
1,785
(1)
603
(63)
398
43
1,156
(909)
407
(917)
(1)
(171)
662
4,752
65
(398)
(964)
3,455
17,262
(302)
(3,130)
(612)
3,278
1,215
20,891
(14,822)
9,919
(11,325)
16,235
(957)
(2,219)
52,628
635
(3,299)
(12,635)
37,329
Cash flows from investing activities:
Payments for purchase of investment securities....................................................................................................
Proceeds from sales of investment securities..........................................................................................................
Payments for purchase of property, plant and equipment..............................................................................
Other..............................................................................................................................................................................................
Net cash used in investing activities .......................................................................................................................
(1,478)
362
(1,584)
(1,099)
(3,799)
(343)
5
(3,609)
(895)
(4,842)
(14,077)
3,446
(15,088)
(10,462)
(36,181)
Cash flows from financing activities:
Decrease in short-term debt, net ..................................................................................................................................
Increase in long-term debt .................................................................................................................................................
Repayment of long-term debt..........................................................................................................................................
Cash dividends paid................................................................................................................................................................
Other..............................................................................................................................................................................................
Net cash used in financing activities .......................................................................................................................
(230)
2,500
(4,965)
(279)
(11)
(2,985)
(319)
—
(3,368)
(266)
670
(3,283)
(2,190)
23,810
(47,286)
(2,664)
(100)
(28,430)
Effect of exchange rate changes on cash and cash equivalents........................................................................
Net increase in cash and cash equivalents....................................................................................................................
Cash and cash equivalents at beginning of year.........................................................................................................
—
(2,864)
4,522
23
(4,647)
9,169
—
(27,282)
43,068
Cash and cash equivalents at end of year (Note 4)................................................................................................
¥1,658
¥4,522
$15,786
23
Notes to Consolidated Financial Statements
1.
Nature of operations
TV TOKYO Corporation (the “Company”) and its consolidated subsidiaries (collectively “TV TOKYO”) are primarily engaged in the broadcasting business, including television network and syndication, operation of a television station and a communication satellite (CS) channel,
production of television programs and provision of related technical services, and advertising sales. In addition, TV TOKYO provides services
relating to management of music copyrights, management of animation characters and other television program-related merchandising rights,
production and distribution of theatrical movies, and sponsorship and promotion of events.
2.
Summary of significant accounting policies
The accompanying consolidated financial statements of TV TOKYO are prepared on the basis of accounting principles generally accepted in
Japan, which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards, and
are compiled from the consolidated financial statements prepared by the Company as required by the Securities and Exchange Law of Japan.
Certain items presented in the consolidated financial statements submitted to the Director of Kanto Finance Bureau in Japan have been
reclassified in these accounts for the convenience of readers outside Japan.
(1) Basis of consolidation
The consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. Consolidated subsidiaries
for the years ended March 31, 2004 and 2003 are as follows:
• TV TOKYO Music, Inc.
• TV TOKYO Medianet, Inc.
• TV TOKYO Commercial, Inc.
• TV TOKYO Art Center, Inc.
• TV TOKYO Lighting, Inc.
• TV TOKYO Systems, Inc.
• TV TOKYO Production, Inc.
• Pronto, Inc.
• TV TOKYO Human, Inc.
• Technomax, Inc.
• TV TOKYO Building, Inc.
• AT-X, Inc.
• TV TOKYO America, Inc.
All significant intercompany accounts and transactions and unrealized intercompany profits have been eliminated in consolidation.
The Company’s overseas subsidiary, TV TOKYO America, Inc., has a fiscal year ending December 31, which differs from that of the
Company. This subsidiary does not prepare financial statements at any date after December 31 or on or before March 31 in the following year. Any material transactions occurring in the period January 1 to March 31 are adjusted for in these consolidated financial statements.
Investments in the following major affiliates are accounted for by the equity method for the years ended March 31, 2004 and 2003.
2004
2003
• Nikkei Visual Images, Inc.
• TV TOKYO Broadband Entertainment, Inc.
• InteracTV Co., Ltd.
• Nikkei Visual Images, Inc.
• Antennule Co., Ltd.
• TV TOKYO Broadband Entertainment Inc.
• InteracTV Co., Ltd.
Antennule Co., Ltd., was excluded from the consolidated balance sheet as of March 31, 2004, due to the dissolution at March
31, 2004.
24
(2) Cash and cash equivalents
Cash and cash equivalents in the consolidated statements of cash flows are composed of cash on hand, bank deposits withdrawable on
demand and short-term investments with an original maturity of three months or less and subject to a minor risk of fluctuations in value.
(3) Marketable securities and investment securities
Securities are classified into four categories: trading securities, held-to-maturity debt securities, equity securities of unconsolidated subsidiaries and affiliates, and available-for-sale securities. Marketable available-for-sale securities are stated at fair value with unrealized gains
and losses, net of applicable taxes, being reported in a separate component of shareholders’ equity. The cost of securities sold is determined
based on the moving average method. Securities that do not have readily determinable fair values are reported at cost.
(4) Hedge accounting
Gains or losses arising from changes in fair value of the derivatives designated as “hedging instruments” are deferred as assets or liabilities
and included in net profit or loss in the same period during which the gains and losses on the hedged items or transactions are recognized.
The derivatives designated as hedging instruments by the Company are principally interest swaps. The related hedged item is longterm bank loans.
The Company has a policy to utilize the above hedging instruments in order to reduce the Company’s exposure to the risk of interest
rate fluctuations. Thus, the Company’s purchases of hedging instruments are limited to, at maximum, the amounts of the hedged items.
The Company evaluates the effectiveness of its hedging activities by reference to the accumulated gains or losses on hedging instruments
and the related hedged items from the commencement of the hedges.
(5) Allowance for doubtful accounts
Receivables are required to be categorized into “normal receivables” and “doubtful receivables” for the purpose of providing an allowance
for doubtful accounts under the prevailing accounting practice in Japan. An allowance for doubtful accounts is provided for normal
receivables based on the Company’s historical write-off experience rate, plus an estimate of irrecoverable amounts for doubtful receivables
on an individual account basis.
(6) Inventories
Program and film costs are valued as determined by the individual cost method. Merchandise and supplies are valued at cost determined
by the first-in, first-out method.
(7) Property, plant and equipment
Property, plant and equipment, including significant renewals and additions, are capitalized at cost. Maintenance and repairs, as well as minor
renewals and betterments, are charged to income as incurred. Depreciation of property and equipment is computed principally by the
declining-balance method at rates based on the estimated useful lives of the respective assets. However, buildings (except for leasehold
improvements and auxiliary facilities attached to buildings) acquired on or after April 1, 1998 are computed by the straight-line method.
(8) Accounting for leases
Lease payments under finance lease contracts are charged to income as incurred, since under Japanese accounting principles, finance leases,
other than those in which the ownership of the leased assets is deemed to transfer to the lessees, may be accounted for by a method
similar to that applicable to ordinary operating leases.
(9) Accrued retirement benefits
Employees who terminate their service with the Company or its domestic consolidated subsidiaries are entitled, under most circumstances,
to lump-sum severance indemnities determined by reference to current basic rates of pay and length of service. The retirement benefit
plans of the Company have features whereby the employees who retire at age 60 or over with 20 or more years of service may elect to
receive benefits in the form of pensions. These plans, which are non-contributory and funded, generally provide for an annuity payable over
a 15-year period subsequent to retirement.
The annual provision for retirement benefits for directors and corporate auditors is calculated to state the liability at the amount that
would be required if all directors and corporate auditors retired at each balance sheet date.
25
(10) Translation of foreign currency accounts
Current and non-current monetary items denominated in foreign currencies are translated into Japanese yen at exchange rates in effect
at the respective balance sheet dates. Financial statements expressed in foreign currencies are translated into Japanese yen at the
exchange rate in effect at the balance sheet date. Differences arising from such translation were shown as foreign currency translation
adjustments as a separate component of shareholders’ equity.
(11) Appropriation of retained earnings
Cash dividends, transfer to legal reserve and bonuses to directors and statutory auditors are recorded in the financial year in which the
proposed appropriation of retained earnings is approved by the shareholders.
(12) Net income per share
Net income per share is based on the weighted average number of shares of common stock outstanding during the respective years.
However, net income should be adjusted by deducting bonuses paid to directors and statutory auditors as well as the payment of dividends
to shareholders of preferred stocks to be recognized as an appropriation of retained earnings, from net income shown in the statements
of income, and the computation of net income per share be made on that adjusted net income basis.
Since no convertible bonds or warrants are issued, there is no dilutive effect on net income per share for the years ended March 31,
2004 and 2003.
(13) Accounting standards for impairment of fixed assets
On August 9, 2002, the Business Accounting Council in Japan issued “Accounting Standard for Impairment of Fixed Assets.” The standard
requires that fixed assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. An impairment loss shall be recognized in the statements of income by reducing the carrying amount of
impaired assets or a group of assets to the recoverable amount to be measured as the higher of net selling price or value in use.
The standard shall be effective for fiscal years beginning April 1, 2005. However, an earlier adoption is permitted for fiscal years beginning
April 1, 2004 and for fiscal years ending between March 31, 2004 and March 31, 2005.
The Company has not yet applied this new standard. However, management believes that application of the new standard would not
have significant impact on the Company’s consolidated financial statements.
3.
U.S. dollar amounts
Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥105=U.S.$1, the approximate effective
rate of exchange on March 31, 2004, has been used in translation. The inclusion of such amounts is not intended to imply that Japanese yen
have been or could be readily converted into, realized or settled in U.S. dollars at that rate or any other rate.
4.
Cash and cash equivalents
Cash and cash equivalents for the purpose of the statements of cash flows at March 31, 2004 and 2003 consisted of:
Millions of yen
Cash and bank deposits..............................................................................................................................................................
Less: Time deposits having original maturity of over three months,
and other non-liquid deposits..............................................................................................................................................
Cash and cash equivalents.........................................................................................................................................................
26
Thousands of
U.S. dollars
2004
2003
2004
¥1,658
¥4,932
$15,786
—
¥1,658
(410)
¥4,522
—
$15,786
5.
Marketable securities and investment securities
The aggregate cost, gross unrealized gains and losses, and carrying amounts on the balance sheets, which were revalued to the related fair value,
of available-for-sale securities with market quotations at March 31, 2004 and 2003 are as follows:
Millions of yen
2004
Marketable equity securities...............................................................................................................................
Other...............................................................................................................................................................................
Total available-for-sale securities ..............................................................................................................
Cost
Carrying
amount
Gross
unrealized
gains
Gross
unrealized
losses
¥1,432
51
¥1,483
¥2,322
42
¥2,364
¥891
—
¥891
¥0(1)
(9)
¥(10)
Cost
Carrying
amount
Gross
unrealized
gains
Gross
unrealized
losses
¥1,470
51
¥1,521
¥1,340
45
¥1,385
¥57
—
¥57
¥(187)
(6)
¥(193)
Millions of yen
2003
Other...............................................................................................................................................................................
Thousands of U.S. dollars
2004
Other...............................................................................................................................................................................
Cost
Carrying
amount
Gross
unrealized
gains
Gross
unrealized
losses
$13,637
489
$14,126
$22,116
399
$22,515
$8,483
—
$8,483
$0(4)
(90)
$(94)
The proceeds from sales of available-for-sale securities for the years ended March 31, 2004 and 2003 are ¥361 million ($3,446 thousand)
and ¥4 million, respectively. The gross realized profits on those sales for the years ended March 31, 2004 and 2003 are ¥310 million ($2,952
thousand) and ¥2 million.
The carrying amounts of available-for-sale securities without market quotations at March 31, 2004 and 2003 are as follows:
Millions of yen
Non-marketable equity securities .........................................................................................................................................
2004
2003
¥4,454
¥5,165
Thousands of
U.S. dollars
2004
$42,424
Investment securities included those for affiliates of ¥539 million ($5,131 thousand) and ¥509 million at March 31, 2004 and 2003, respectively.
27
6.
Inventories
Inventories at March 31, 2004 and 2003 consisted of the following:
Millions of yen
Program and film costs................................................................................................................................................................
Supplies ................................................................................................................................................................................................
Thousands of
U.S. dollars
2004
2003
2004
¥13,566
31
¥13,597
¥14,605
33
¥14,638
$129,199
297
$129,496
7.
Property, plant and equipment
Property, plant and equipment at March 31, 2004 and 2003 consisted of the following:
Millions of yen
Land........................................................................................................................................................................................................
Buildings ...............................................................................................................................................................................................
Machinery and equipment.........................................................................................................................................................
Construction in progress............................................................................................................................................................
Accumulated depreciation ........................................................................................................................................................
Thousands of
U.S. dollars
2004
2003
2004
¥04,369
10,662
19,124
77
34,232
(16,116)
¥18,116
¥04,368
10,007
17,670
2,521
34,566
(16,171)
¥18,395
$041,610
101,537
182,137
737
326,021
(153,483)
$172,538
8.
Leases
Leased assets and related expenses in respect of the Company’s finance leases, other than those which transfer ownership of the lease assets,
are accounted for using a method similar to that of operating leases. Finance lease charges for the years ended March 31, 2004 and 2003
were ¥1,296 million ($12,338 thousand) and ¥1,055 million, respectively. Had they been capitalized on the consolidated balance sheets, the
following items would have been recognized on the consolidated balance sheets and the consolidated statements of income as at and for the
years ended March 31, 2004 and 2003:
Millions of yen
2004
2003
Thousands of
U.S. dollars
2004
Machinery and equipment—at cost ....................................................................................................................................
Other.....................................................................................................................................................................................................
Less: Accumulated depreciation ............................................................................................................................................
¥7,954
297
(3,674)
¥4,577
¥5,702
256
(2,738)
¥3,220
$75,753
2,830
(34,991)
$43,592
Depreciation......................................................................................................................................................................................
Interest expense..............................................................................................................................................................................
¥1,296
65
¥1,016
54
$12,339
617
28
Depreciation above is computed based on the straight-line method over the lease term of the leased assets, the residual value of which
is deemed to be zero.
The present values of future lease payments relating to finance leases at March 31, 2004 and 2003, which included the interest portion
thereon, are as follows:
Millions of yen
Within one year ..............................................................................................................................................................................
Over one year..................................................................................................................................................................................
2004
2003
¥1,422
3,269
¥4,691
¥0,992
2,278
¥3,270
Thousands of
U.S. dollars
2004
$13,544
31,133
$44,677
9.
Short-term and long-term debt
Short-term debt at March 31, 2004 and 2003 consisted of the following:
Millions of yen
2.50% unsecured bonds due 2004.......................................................................................................................................
Short-term loans, principally from banks and insurance companies,
with average interest of 0.78% ............................................................................................................................................
Current portion of long-term debt......................................................................................................................................
Thousands of
U.S. dollars
2004
2003
2004
¥ —
1,000
¥4,000
—
$
200
829
¥2,029
430
865
¥5,295
1,905
7,890
$19,319
—
9,524
Long-term debt at March 31, 2004 and 2003 consisted of the following:
Millions of yen
Long term loans, principally from banks and insurance companies,
due from 2007 to 2008 with average interest of 1.61%......................................................................................
Less: Portion due within one year ........................................................................................................................................
Thousands of
U.S. dollars
2004
2003
2004
¥ —
2,000
1,900
¥1,000
2,000
2,000
$
—
19,048
18,095
5,660
9,560
(828)
¥8,732
4,025
9,025
(865)
¥8,160
53,904
91,047
(7,890)
$83,157
Millions of yen
Thousands of
U.S. dollars
¥1,000
—
3,900
$09,524
—
37,143
The aggregate annual maturities of the unsecured bonds at March 31, 2004 are as follows:
Year ending March 31
2005 ............................................................................................................................................................................................................................................
2006 ............................................................................................................................................................................................................................................
2007 ............................................................................................................................................................................................................................................
29
The aggregate annual maturities of the non-current portion of long-term debt at March 31, 2004 are as follows:
Year ending March 31
2006 ............................................................................................................................................................................................................................................
2007 ............................................................................................................................................................................................................................................
2008 ............................................................................................................................................................................................................................................
2009 ............................................................................................................................................................................................................................................
Millions of yen
Thousands of
U.S. dollars
¥0,777
3,277
592
185
$07,400
31,214
5,643
1,762
10.
Income taxes
Income taxes applicable to the Company and its domestic consolidated subsidiaries consist of corporation tax, inhabitants tax and enterprise
tax, which in the aggregate result in normal statutory rates of approximately 40.49% and 41.79% for the years ended March 31, 2004 and
2003. Foreign consolidated subsidiaries are subject to income taxes of the countries in which they operate.
The significant components of deferred tax assets and liabilities at March 31, 2004 and 2003 are as follows:
Millions of yen
2004
Accrued retirement benefits....................................................................................................................................................
Accrued retirement benefits for directors and statutory auditors.....................................................................
Accrued bonus.................................................................................................................................................................................
Amortization of software...........................................................................................................................................................
Loss carryforwards.........................................................................................................................................................................
Unrealized holding losses on available-for-sale securities........................................................................................
Other.....................................................................................................................................................................................................
Gross deferred tax assets ...................................................................................................................................................
Valuation allowance................................................................................................................................................................
Total deferred tax assets ..............................................................................................................................................
Unrealized holding gains on available-for-sale securities..........................................................................................
Other.....................................................................................................................................................................................................
Total deferred tax liabilities.........................................................................................................................................
Net deferred tax assets.................................................................................................................................................
30
¥2,297
187
543
191
458
—
1,418
5,094
(457)
4,637
(359)
(7)
(366)
¥4,271
2003
¥2,285
245
432
204
268
79
478
3,991
(268)
3,723
—
(11)
(11)
¥3,712
Thousands of
U.S. dollars
2004
$21,876
1,779
5,175
1,819
4,357
—
13,504
48,510
(4,357)
44,153
(3,416)
(66)
(3,482)
$40,671
The valuation allowance principally relates to deferred tax assets recognized for loss carryforwards of consolidated subsidiaries.
Reconciliation of the differences between the statutory tax rate and the effective income tax rate is as follows:
2004
2003
Statutory tax rate.......................................................................................................................................................................................................................... 40.49%
Increase (reduction) in taxes resulting from:
Non tax-deductible expenses.........................................................................................................................................................................................
8.65
Valuation allowance .............................................................................................................................................................................................................. 10.50
Special tax benefit for R&D expenses ....................................................................................................................................................................... (11.70)
Effect of revising tax rate based on the local tax law amendment ...........................................................................................................
0.99
Additional tax payment due to investigation by tax authority.....................................................................................................................
3.99
Other ............................................................................................................................................................................................................................................
4.70
Effective income tax rate.......................................................................................................................................................................................................... 57.62%
41.79%
8.91
7.79
.—
4.94
0.21
3.08
60.56%
11.
Severance and retirement plans
The following table sets forth the benefit obligation, plan assets and funded status of the Company and its consolidated subsidiaries at March
31, 2004 and 2003:
Thousands of
U.S. dollars
Millions of yen
2004
Projected benefit obligation .....................................................................................................................................................
Fair value of plan assets...............................................................................................................................................................
Accrued retirement benefits recognized in the consolidated balance sheets.............................................
2003
¥9,016
(2,680)
¥6,336
2004
¥8,795
(2,130)
¥6,665
$85,863
(25,519)
$60,344
Severance and retirement expenses of the Company and its consolidated subsidiaries included the following components for the years
ended March 31, 2004 and 2003:
Thousands of
U.S. dollars
Millions of yen
2004
Service cost........................................................................................................................................................................................
Interest cost .......................................................................................................................................................................................
Immediate recognition of actuarial difference................................................................................................................
Net benefit expense .......................................................................................................................................................
2003
¥500
161
(320)
¥341
2004
¥ 438
187
759
¥1,384
$4,763
1,533
(3,047)
$3,249
Assumptions used in accounting for the defined benefit plans for the years ended March 31, 2004 and 2003 are as follows:
Discount rate ............................................................................................................................................................................................
Expected rate of return on plan assets......................................................................................................................................
Method of attributing the projected benefits to periods of service..........................................................................
2004
2003
2.0%
0.0%
Straight-line basis
2.0%
0.0%
Straight-line basis
Actuarial differences and prior service cost, if any, are charged to income in the year when they occur.
31
12.
Shareholders’ equity
The Japanese Commercial Code provides that an amount equivalent to a minimum of 10% of cash dividends and bonuses paid to directors and
corporate auditors be appropriated as a legal reserve until such reserve reaches a certain limit, which was 25% of the capital stock, less additional
paid-in capital.
Appropriations of retained earnings are recorded in the accounts when the shareholders’ approval is obtained. The following appropriations of retained earnings of the Company for the year ended March 31, 2004 were approved at the ordinary general meeting of shareholders
held on June 25, 2004. These appropriations were not recorded in the consolidated financial statements for the year ended March 31, 2004,
but will be recorded in those for the year ending March 31, 2005.
Millions of yen
Cash dividends at ¥15.00 ($0.14) per share .......................................................................................................................................................
Bonuses to directors..........................................................................................................................................................................................................
¥279
48
Thousands of
U.S. dollars
$2,663
457
13.
Research and development expenses
Research and development expenses charged to income for the years ended March 31, 2004 and 2003 amounted to ¥84 million ($800
thousand) and ¥85 million, respectively.
14.
Contingent liabilities
Contingent liabilities at March 31, 2004 and 2003 were as follows:
Millions of yen
Loans guaranteed for Broadcasting Satellite System Corporation.....................................................................
2004
2003
¥2,098
¥2,344
Thousands of
U.S. dollars
2004
$19,981
15.
Segment information
(1) Business segments
The Company and its consolidated subsidiaries’ business segments, which are required to be disclosed pursuant to regulations on
consolidated financial statements in Japan, have been classified based upon similarity of products and services, marketing methods, etc.,
as follows:
a) Broadcasting: Television network and syndication, operation of a television station and a CS channel, production of television programs
and provision of related technical services, advertising sales.
b) Rights management: Management of music copyrights, management of animation characters and other television program-related
merchandising rights, production and distribution of theatrical movies, sponsorship and promotion of events.
32
Segment information by business segment for the years ended March 31, 2004 and 2003 is summarized as follows:
Millions of yen
2004
Elimination
and corporate
assets*
Broadcasting
Rights
management
Net sales:
Outside customers ........................................................................................................
Intersegment sales..........................................................................................................
Total ................................................................................................................................
Operating expenses.............................................................................................................
Operating income.................................................................................................................
¥97,324
970
98,294
95,096
¥03,198
¥12,008
333
12,341
11,728
¥00,613
¥109,332
1,303
110,635
106,824
¥003,811
¥
—
(1,303)
(1,303)
(1,192)
¥00(111)
¥109,332
—
109,332
105,632
¥003,700
Assets, depreciation and capital expenditures:
Assets ....................................................................................................................................
Depreciation......................................................................................................................
Capital expenditures.....................................................................................................
¥44,704
1,483
2,897
¥03,808
11
1
¥048,512
1,494
2,898
¥24,528
319
287
¥073,040
1,813
3,185
Total
Consolidated
Millions of yen
2003
Elimination
and corporate
assets*
Broadcasting
Rights
management
Net sales:
Total ................................................................................................................................
¥98,191
1,211
99,401
97,796
¥01,606
¥10,091
682
10,773
9,546
¥01,227
¥108,282
1,893
110,175
107,342
¥002,833
¥
—
(1,893)
(1,893)
(1,771)
¥ (122)
¥108,282
—
108,282
105,571
¥002,711
Assets ....................................................................................................................................
Depreciation......................................................................................................................
¥45,561
1,424
3,888
¥04,494
14
0
¥050,055
1,439
3,888
¥23,743
346
83
¥073,798
1,785
3,971
Total
Consolidated
* Intersegment transactions are eliminated from the consolidated financial statements. Corporate assets are included in the consolidated financial statements. Corporate assets include surplus funds of cash
and bank deposits, property, plant and equipment related to administrative divisions and investment securities.
33
Thousands of U.S. dollars
2004
Elimination
and corporate
assets*
Broadcasting
Rights
management
Total
Net sales:
Total ................................................................................................................................
$926,894
9,236
936,130
905,680
$030,450
$114,367
3,173
117,540
111,694
$005,846
$1,041,261
12,409
1,053,670
1,017,374
$0,036,296
$
—
(12,409)
(12,409)
(11,351)
$ (1,058)
$1,041,261
—
1,041,261
1,006,023
$0,035,238
Assets ....................................................................................................................................
Depreciation......................................................................................................................
$425,753
14,125
27,595
$036,267
106
5
$0,462,020
14,231
27,600
$233,604
3,031
2,735
$0,695,624
17,262
30,335
Consolidated
* Intersegment transactions are eliminated from the consolidated financial statements. Corporate assets are included in the consolidated financial statements. Corporate assets include surplus funds of cash
and bank deposits, property, plant and equipment related to administrative divisions and investment securities.
(2) Geographic segments
Sales and total assets of the Company and its domestic subsidiaries for the years ended March 31, 2004 and 2003 represented more
than 90% of the consolidated sales and total assets of the respective years. Accordingly, geographic segments are not required to be
disclosed.
(3) Sales to foreign customers
Sales to foreign customers for the years ended March 31, 2004 and 2003 represented less than 10% of consolidated net sales of the
respective years. Accordingly, sales to foreign customers are not required to be disclosed.
34
Report of Independent Auditors
Kasumigaseki Bldg. 32nd Floor
3-2-5, Kasumigaseki, Chiyoda-ku,
Tokyo 100-6088, Japan
The Board of Directors of
We have audited the accompanying consolidated balance sheets of TV TOKYO Corporation and its subsidiaries as of March 31, 2004 and 2003,
and the related consolidated statements of income, shareholders’ equity and cash flows for the years then ended, all expressed in Japanese
yen. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial
position of TV TOKYO Corporation and its subsidiaries as of March 31, 2004 and 2003, and the consolidated results of their operations and
their cash flows for the years then ended, in conformity with accounting principles generally accepted in Japan.
The amounts expressed in U.S. dollars, which are provided solely for the convenience of the reader, have been translated on the basis
set forth in Note 3 to the accompanying consolidated financial statements.
ChuoAoyama PricewaterhouseCoopers
Tokyo, Japan
July 5, 2004
35
TV TOKYO Group
The TV TOKYO Group comprises TV TOKYO, 13 consolidated subsidiaries and three affiliates for which the equity method of
accounting is applied. The Group aims to grow in business size and increase operational efficiency.
CONSOLIDATED SUBSIDIARIES
Company Name
Address
Major Activities
TV TOKYO Music, Inc.
3-12, Toranomon 4-chome,
Minato-ku, Tokyo 105-8012
Phone: +81-3-3432-1260
Music publishing
TV TOKYO Medianet, Inc.
Phone: +81-3-3432-1288
Television program licensing
TV TOKYO Commercial, Inc.
Phone: +81-3-3432-1231
Preparation of television commercials
TV TOKYO Art Center, Inc.
Phone: +81-3-3432-1276
Planning and production of studio sets
TV TOKYO Lighting, Inc.
3-3, Higashi-Shinagawa 1-chome,
Shinagawa-ku, Tokyo 140-0002
Phone: +81-3-5462-1580
Planning and preparation of lighting for
television production
TV TOKYO Systems, Inc.
Phone: +81-3-3432-1110
Planning, development and management of
computer systems
TV TOKYO Production, Inc.
Phone: +81-3-5462-1280
Planning and production of television programs
Pronto, Inc.
Phone: +81-3-5401-0220
Direct marketing business, advertising agency
TV TOKYO Human, Inc.
New Sumitomo Toranomon Building,
Phone: +81-3-3436-4801
Broadcasting preparation
Technomax, Inc.
Phone: +81-3-5462-1200
Production technology for television programs
TV TOKYO Building, Inc.
Phone: +81-3-5462-1012
Leasing and management of Tennouzu Studio
and real estate
AT-X, Inc.
Phone: +81-3-5776-2417
Communications satellite (CS) anime channel
TV TOKYO America, Inc.
1325 Avenue of the Americas, Suite 2402,
New York, NY 10019, U.S.A.
Phone: +1-212-261-6430
Production of television news programs in
the United States
36
AFFILIATES
Company Name
Address
Major Activities
Nikkei Visual Images, Inc.
6-1, Nihonbashi Kayabacho 2-chome,
Chuo-ku, Tokyo 103-0025
Phone: +81-3-3639-2901
Planning and production of television programs
TV TOKYO Broad Band Entertainment, Inc. 3-13, Toranomon 4-chome,
Phone: +81-3-5733-3888
Supply and distribution of Internet content
InteracTV Co., Ltd.
Licensed broadcaster on CS platforms
13th floor, Shiroyama JT Trust Tower
Phone: +81-3-6430-2634
NETWORK
The TXN network comprises six television stations, led by TV TOKYO, covering 70% of all television viewing households in Japan.
Company Name
Address
Television Osaka, Inc. (TVO)
2-18, Otemae 1-chome, Chuo-ku, Osaka 540-8519
Phone: +81-6-6947-7777
URL: http://www.tv-osaka.co.jp
Aichi Television Broadcasting Co., Ltd. (TVA)
4-8, Osu 2-chome, Naka-ku, Nagoya, Aichi 460-8325
Phone: +81-52-203-0250
URL: http://www.tv-aichi.co.jp
TV Setouchi Broadcasting Co., Ltd. (TSC)
8-8, Noda 5-chome, Okayama 700-8523
Phone: +81-86-244-2300
URL: http://www.webtsc.com
Television Hokkaido Broadcasting Co., Ltd. (TVh)
12-4, Odori-Higashi 6-chome, Chuo-ku, Sapporo, Hokkaido 060-8517
Phone: +81-11-232-1117
URL: http://www.tv-hokkaido.co.jp
TVQ Kyushu Broadcasting Co., Ltd. (TVQ)
3-1, Sumiyoshi 2-chome, Hakata-ku, Fukuoka 812-8570
Phone: +81-92-262-0019
URL: http://www.tvq.co.jp
37
Corporate Data
Company Name:
Headquarters:
Capital:
Began Broadcasting:
Channels:
3-12, Toranomon 4-chome, Minato-ku, Tokyo 105-8012, Japan
¥8,910,957,000
April 12, 1964
Analog: Channel 12
Digital: Channel 7
DOMESTIC BRANCHES AND STUDIO
Kansai
18th floor, Aqua Dojima West Building, 4-16, Dojimahama 1-chome, Kita-ku, Osaka 530-0004
Phone: +81-6-6341-5512
Fax: +81-6-6341-0512
Nagoya
6th floor, Shin-Kyouei Building, 7-9, Sakae 3-chome, Naka-ku, Nagoya, Aichi 460-0008
Phone: +81-52-262-2712
Fax: +81-52-262-2912
Tennozu Studio
3-3, Higashi-Shinagawa 1-chome, Shinagawa-ku, Tokyo 140-0002
Phone: +81-3-5462-1012 (TV TOKYO Building)
OVERSEAS BRANCHES
TV TOKYO America, Inc. New York Bureau
1325 Avenue of the Americas, Suite 2402, New York, NY 10019, U.S.A.
Phone: +1-212-261-6430
Fax: +1-212-261-6439
TV TOKYO America, Inc. Washington, DC, Bureau
529 14th Street, NW Room 803, Washington, DC 20045, U.S.A.
Phone: +1-202-638-0441
Fax: +1-202-638-0443
London
London International News Centre, 66–67 Newman Street, London W1T 3EQ, U.K.
Phone: +44-20-7323-5505
Fax: +44-20-7436-6424
Moscow
Radisson Slavjanskaya Hotel 2nd Floor, Ploschad Evropy 2, 121059 Moscow, Russia
Phone: +7-095-941-8593
Fax: +7-095-941-8595
Beijing
Wai Waijiaogongyu 11-153, Jianguomen, Chaoyang District, Beijing, People’s Republic of China
Phone: +86-10-6532-6785
Fax: +86-10-6532-6784
Hong Kong
Room 506, Dominion Centre, No. 43–59 Queen’s Road East, Wanchai, Hong Kong
Phone: +852-2824-1599
Fax: +852-2824-2225
Seoul
10th floor, Maeil Business Newspaper, 30-1, 1-ga, Pil-dong, Jung-ku, Seoul, Republic of Korea
Phone: +82-2-2268-3093
Fax: +82-2-2268-3094
(As of August 5, 2004)
38
Board of Directors and Auditors
President
Sadahiko Sugaya
Managing Directors
Hiroshige Mori
Minoru Fujii
Tamizo Suzuki
Hiroji Misawa
Yoshiharu Inukai
Shinichi Minowa
Directors
Takeyuki Kumamura
Tadashi Inukai
Kazusada Hojo
Toshikazu Harada
Tetsuo Shimakawa
Hiroshi Ishikawa
Satoshi Kikuchi
External Directors
Ryoki Sugita
(President, Nihon Keizai Shimbun, Inc.)
Toshio Taketani
(Managing Director, Nihon Keizai Shimbun, Inc.)
Standing (left to right): Shinichi Minowa, Hiroji Misawa, Tamizo Suzuki, Yoshiharu Inukai
Seated (left to right): Minoru Fujii, Sadahiko Sugaya, Hiroshige Mori
Standing Corporate Auditors Hajime Okugawa
Daisaku Ogawa
Corporate Auditors
Keiichiro Kuboniwa
(Managing Director, Nihon Keizai Shimbun, Inc.)
Hiroshi Araki
(Corporate Adviser, Tokyo Electric Power Co., Inc.)
(As of June 25, 2004)
Investor Information
Number of Shares:
Authorized:
Issued:
Stock Code:
Stock Exchange Listing:
Transfer Agent and Registrar:
Independent Auditors:
Fiscal Year-End:
Shareholders’ Meeting:
Investor Relations Section:
74,580,000
20,645,000
9411
First Section of the Tokyo Stock Exchange
Mizuho Trust & Banking Co., Ltd.
ChuoAoyama PricewaterhouseCoopers
March 31
June
Corporate Communications Department
Phone: +81-3-3459-9411 Fax: +81-3-5473-6392
(As of August 5, 2004)
Forward-Looking Statements
This annual report contains plans, outlooks, strategies, beliefs and other information regarding projections of TV TOKYO’s future operating results that are not
statements of historical fact. These statements reflect management’s beliefs based on information currently available. Users of this annual report are cautioned that
any number of significant, unknown and uncontrollable factors may cause forecasts to differ materially from actual results.
39
Phone: +81-3-3432-1212 (General)
+81-3-3459-9411 (IR)
E-mail: [email protected]
URL: http://www.tv-tokyo.co.jp/corporation
Printed in Japan on recycled paper

Business Report 2004

Transcription

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