The battle for control of Nippon Broadcasting System Inc. is a study in contrasting strategies.

The young and nimble challenger, Internet services company Livedoor Co., has staked all on a blitzkrieg assault to outflank its entrenched opponent, Fuji Television Network Inc., and win control of radio broadcaster Nippon Broadcasting.

Though much smaller in scale, Nippon Broadcasting is the leading shareholder in Fuji TV.

With that beachhead secured, Livedoor will then have the muscle to come knocking on the door of Fuji Television Network Inc. itself.

Under Commercial Code provisions, any shareholder with more than one-third of outstanding shares has veto power over special motions presented at shareholders' meetings.

Special motions are required to make important decisions about a company's future, including any change to the articles of incorporation, a reduction in capital, mergers, stock conversions or company spinoffs.

With close to a 38-percent stake in Nippon Broadcasting, Livedoor President Takafumi Horie had banked on using that influence to bring Fuji TV to the table to negotiate a possible business tie-up.

The problem is that Fuji TV Chairman Hisashi Hieda is having none of it: He has adamantly refused to even meet with Horie to discuss this matter.

Not one to back down without a fight, Horie likened Fuji TV's stalling tactics to a futile attempt to stave off defeat from a hopeless position in a game of shogi chess.

``It's useless to try to protect the king when the outcome is inevitable,'' Horie said.

For Fuji TV, the strategy is attrition. Financial analysts agree that the longer the war lasts, the greater Fuji TV's chances of victory.

Livedoor's Achilles' heel is the manner in which it financed the acquisition of Nippon Broadcasting shares.

The weak point in Horie's strategy to gain control of Nippon Broadcasting is the 80 billion yen loan his company received from its underwriter to pay for the shares.

The terms of the loan are potentially crippling to Horie. When, on Feb. 24, Livedoor issues 80 billion yen in convertible bonds, the sale will not be open to the public, with the bonds sold at face value.

Instead, they will all be snapped up by a single investor, a company belonging to the group led by the American investment bank Lehman Brothers.

Though Livedoor will pay no interest, Lehman Brothers will gain the right to convert the bonds into Livedoor stock at a later date, and under some rather lucrative conditions.

The conversion share price, which determines how many Livedoor shares Lehman Brothers can obtain, will depend on a number of conditions.

For one thing, the price will be revised weekly and calculated at 90 percent of the weighted average share price of Livedoor stock over the three trading days preceding the day on which the calculation is made, ordinarily a Friday.

The lowest price at which the bonds can be converted is 157 yen a share.

Lehman has also been promised a loan of Livedoor shares from Horie.

Those conditions of the contract between Livedoor and Lehman Brothers exert downward pressure on the price of Livedoor shares.

While falling share prices are a concern for any business executive, it is a matter of life and death for Livedoor.

The company has based its management strategy on procuring capital by increasing its market capitalization, or the number of shares outstanding multiplied by the current market price.

If Livedoor fails to gain quick control of Nippon Broadcasting and sees its own share price tumble, Livedoor investors may start to have second thoughts.

If Livedoor experiences cash flow problems as a result, it could be forced to sell off its Nippon Broadcasting shares.

As if he didn't have enough problems already, Horie may face more headaches if the statements Friday by government officials are any indication.

Officials at the Financial Services Agency said they would investigate the manner in which Livedoor purchased the Nippon Broadcasting shares through after-hours trading.

Officials added that they were also considering revising the Securities and Exchange Law to restrict after-hours trading.

Business leaders have decried the practice of acquiring shares through after-hours trading in order to gain control over another company.

Only if their intentions are announced in advance can companies launch a takeover bid and acquire more than one-third of the outstanding shares in the target company.

Companies must state in advance the buying price and number of shares sought. However, Livedoor's acquisition of Nippon Broadcasting shares caught many by surprise.

Opening another front in the battle, Taro Aso, minister of internal affairs and communications, raised doubts Friday about the propriety of having Livedoor use funds procured from a foreign company to acquire a major stake in a domestic broadcaster.(IHT/Asahi: February 19,2005)