Stealing a TV March

A mountainous island nation with few natural resources, Japan depends on the world economy to make its living. In the past, it has relied on trade to secure enough foreign money to buy the raw materials it needs, but in recent years it has swung increasingly to making sizable foreign investments. One of the biggest of these took shape last week, when Matsushita, a $4 billion giant in consumer electronics and household appliances, signed an agreement to buy Motorola Inc.'s U.S. television business.

The deal will make Matsushita the third biggest seller of TV sets in the U.S., trailing only Zenith and RCA and easily surpassing its two Japanese rivals, Sony and Hitachi. One executive of a Japanese competitor exclaimed that the news was as "sensational" as "Toyota buying out Ford" would be.

The analogy is considerably exaggerated, but the transaction is indisputably major. Motorola's TV sets last year ran up sales of about $240 million, or 6% to 7% of the U.S. total. Added to Matsushita's sales of Panasonic products, which will continue through a separate distribution network, they will give Matsushita about 15% of the American TV market, v. about 23% each for Zenith and RCA. Matsushita is also stealing a march on its archrival Sony, both in the U.S. and Japan. It will acquire three Motorola plants in the U.S. and one in Canada, giving it a North American manufacturing base far larger than that of Sony, which became the first Japanese TV company to manufacture in the U.S. by building a plant in 1972 in San Diego. Further, the buy-out nullifies a deal that Motorola had made to market large-screen Quasar color TVs in Japan through a Sony subsidiary (TIME, Sept. 10). Luxury color-TV sets have begun to show signs of catching on with the Japanese consumer, and the benefits of Motorola's technological expertise in making them will now go to Matsushita rather than Sony.

New Coach. Motorola will rid itself of a division that had piled up losses in the past five years--partly because of Japanese competition. Those losses had begun to threaten the profits of Motorola's billion-dollar-a-year business in semiconductors and radio and auto communications equipment. Wishing to concentrate on those products, Motorola began sniffing around for possible buyers for the TV business early this year.

Matsushita snapped at the chance for several reasons. Faced with rising labor costs, crowded land space and a polluted environment at home, it could not very profitably expand its facilities in Japan to serve the American or world markets. Also, manufacturing inside the U.S. will enable it to insulate part of its American sales from the uncertainties of foreign-exchange trading.

In the past three years Matsushita has been forced to hike U.S. prices on its Panasonic products as much as 15% because of increases in the value of the Japanese yen on world money markets.

Similar price raises on Quasar sets made in the U.S. will be unnecessary, whatever happens to the yen. Motorola Chairman Robert W. Galvin says that Matsushita will be able to put more money, effort and energy into the TV business than Motorola could have, and adds: "It will be able to turn our people on as a new coach does."

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