Sony bid part of sales strategy

Press, 16 September 1987, Page 42

Sony bid part of sales strategy

STEVEN BRULL

By !

NZPA-Reuter Tokyo Sony’s bid for the CBS records division is part of a strategy to use superstars to sell sophisticated electronics equipment, according to industry analysts. CBS’s stable of recording stars — which includes Michael Jackson, Bruce Springsteen and Cindy Lauper — has helped it become America’s largest record company. Sony wants to use these artists’ popularity to sell software and hardware to recently developed compact-disc-video (CD-V) and laserdisc markets, the analysts said. “Acquiring video software

is one of our main goals,” a Sony spokesman said. Dominance in software will also help create markets for compact-disc-based data-stor-age devices and high-defini-tion television (HDTV). “Sony needs to establish itself in software, it’s much more profitable than hardware,” said Sanae Suzuki Rawle, a consumer electronics analyst at Barclay’s de Zoete .Wedd. Television sets, radio receivers and other low-to mid-range goods are no longer lucrative, because the strong yen and competition from newly industrialised Asian countries have forced makers to slash profit margins. The products Sony hopes to

sell more easily using the CBS superstars are expensive and profitable, industry analysts said. Negotiations with CBS over its records group have not yet got down to specifics, said the Sony spokesman. CBS said in a short statement in New York that it would consider and respond to Sony’s inquiry in due course. Last year CBS rejected a Sony offer for the record division of SUSI.2S billion (5NZ2.028). It has maintained that it is not interested in a sale. The unit has recently been a star performer at CBS, helping to offset a slump in its core broadcasting business. Operating profit jumped

last year to 5U5162.1 million (5NZ262.60M) on sales of 1U51.498 (5NZ2.418), 31 per cent of the company’s overall revenues. Sony hopes to develop the CD-V market first, analyst Rawle said. CD-Vs, which hold 20 minutes of music and five of images, are especially suited to music videos, she said. "The success of CD-V will lead to success of the laser disc,” she said, adding, “CD-V sales are about to take off, in part because Philips is keen to market them in the United , States.” / Sony’s experience with records dates to the 1968 birth of CBS/Sony, a 50-50 joint venture that has been extremely profitable. CBS/Sony

directs production of Sony's optical products, Rawle said. Sony also hopes to develop markets for CDs and laser discs as data-storage devices. CDs hold large amounts of information and can be accessed quickly. Interactive and erasable formats are just developing, Rawle said. Sony also plans to develop a chain in cinemas that use HDTV, an analyst at a major Japanese securities house said. HDTV is a broadcast medium that offers picture quality comparable to 35mm film. “Demand for HDTV in Japan will total 30 trillion yen by the year 2000, but the key to devloping HDTV is software,” he said.