J-Star exits Japan TV shopping business via trade sale

The private equity firm bought Itty in 2018 through its third Japan middle-market fund, which has a corpus of JPY32.5 billion ($309 million). That vehicle is now fully deployed, and J-Star is investing Fund IV, having achieved a final close of JPY48.5 billion last year. Check sizes still fall in the JPY1-3 billion range.

Itty’s approach is like that of traditional TV shopping channels. The company identifies popular consumer product lines each season and pushes out its own copycat versions. These are distributed through e-commerce and wholesale channels. Around 10 products are released each year, of which one or two generate demand that outlasts the initial peak purchasing period.

On making the acquisition, J-Star noted that Itty had been in operation for nine years and proved its business model across multiple cycles through careful product selection, effective marketing, and competitive pricing. On selling the company, J-Star said that becoming part of TV Asahi would give Itty access to a wider array of clients and thereby spur growth.

TV Asahi said in a filing that Itty suited its medium-term management plan, which includes strengthening content production capabilities and diversifying revenue streams. The Tokyo-listed company previously noted that it faces challenges from digitalization, which has driven a rapid expansion in video advertising, and a proliferation of content types arising from the rise of smart phones and tablets. TV Asahi allocated JPY30 billion for M&A and partnerships focused on content production.

For the 12 months ended March 2020, TV Asahi’s revenue reached JPY293.6 billion, down 2.7% year-on-year, while operating income fell 22.3% to JPY12.6 billion and net profit rose 105% to JPY26.4 billion. TV broadcasting accounts for about 80% of revenue, with advertising responsible for three-quarters of the segment total.

The company is also involved in music publishing, movie production, global video distribution supported by live events, and it is pushing aggressively into internet-related business, for example through a streaming joint venture with CyberAgent. There is an existing shopping business, driven by the Jun Sanpo TV shopping program.

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• Topics
• North Asia
• Trade sale
• Media
• Consumer
• Japan
• J-Star
• e-commerce