Nissho Iwai Buys Into Guthy-Renker Asia Pacific

Japanese trading giant Nissho Iwai Corp., Tokyo, purchased a minority interest Guthy-Renker International Asia Pacific, a subsidiary of Guthy-Renker Corp., Palm Desert, CA, in a deal that is expected to strengthen Guthy-Renker's reach in Asian markets.

Nissho Iwai is a $75 billion trading company that owns a wide variety of distribution platforms that are essential for DRTV marketing. The company not only owns a minority interest in two satellite broadcasting firms, but also owns 50 percent of Nifty, a commercial online service, and has an extensive network of warehouses, trade relationships, management information systems and other infrastructure that are necessary to get products in the hands of consumers.

“Nissho Iwai brings to us significant operational integration for the growth of our business throughout the Asia Pacific region,” said a spokesperson for Guthy-Renker. “They're aggressive sourcers of goods from manufacturers and they allow us to work with a very large and influential company in that region.”

The spokesperson said that while Guthy-Renker boasts expertise in DRTV marketing, Nissho Iwai has an intimate understanding of doing business in various Asian countries.

“There's nothing like having a partner that knows the intricacies of the culture and taste of these countries,” he said. “They will help in creating programming that is more sensitive to consumer tastes.”

Guthy-Renker posted revenues of $45 million last year in the Asia Pacific region, which includes its operations in Japan, China, Australia and Southeast Asia. The entire region has about 400 million TV households. Guthy-Renker, whose annual sales of more than $350 million make it one of the largest infomercial marketing companies in the world, opened its first office in Japan in January 1996, followed by an office in Beijing in December of that year. A third office in New Zealand was opened last year.

The company's largest infomercial rival in the region is Quantum Far East, a unit of National Media Corp., Philadelphia, that expanded into Asia in the early 90s. National Media declined to comment on the Guthy-Renker deal with the Japanese trading giant.

“We're catching up very quickly in Japan,” the Guthy-Renker spokesperson said. “We want to become the dominant DRTV company in the region.”

News Corp. Ties

Nissho Iwai's media holdings include an interest in Japan Satellite Systems Inc., whose JCSAT-5 satellite covers Asia, Australia and Hawaii. It also is a part owner of SkyPerfecTV, a direct-to-home satellite broadcasting service that was formed with the recent merger between PerfecTV and News Corp.'s JSkyB venture.

News Corp. also owns a 37.5 percent interest in Guthy-Renker, but the two companies have been negotiating a deal to increase News Corp.'s interest in the infomercial marketing company. Sources familiar with the negotiations say the two companies are discussing a figure of $30 million that would raise News Corp.'s equity interest in Guthy-Renker. A major issue in the negotiations is control of the company. Sources say that Greg Renker and Bill Guthy, the founders of their namesake company, do not want to accede control to Rupert Murdoch, News Corp.'s founder.

“Murdoch wants to make sure Greg and Bill don't take something like $5 million each and put the rest of the money in the company,” said a source familiar with the negotiations. “Murdoch isn't stupid. He wants to make sure his money goes into growing the business.”

A possible solution may be to issue non-voting stock to News Corp. that would raise its interest in Guthy-Renker without acceding managerial control. A source said that Guthy-Renker is interested in using News Corp. stock to acquire other companies in the DRTV industry, with National Media Corp. and K-Tel International Inc., Los Angeles, as potential takeover targets.

Hard Goods A Priority

Guthy-Renker is making increased efforts to develop more hard goods products that can be exported into international distribution channels. Hard goods generally include household cleaning and kitchen gadgets, exercise equipment and auto care accessories. While the company's infomercials for Tony Robbins' self-help programs and Victoria Principal's Principal Secret skin care line have been big winners for the company in the United States, they face tremendous hurdles overseas.

Intellectual property programs, such as the self-help category, do not translate well into foreign cultures, while cosmetic products are highly regulated in some Asian countries. Guthy-Renker will launch Principal Secret in Japan this summer, following a year-long process of getting necessary government approvals.

The company told DRTV News in March that it would hire new people to develop hard goods, but it met difficulties in recruiting people that were willing to move to Palm Desert, CA, a community of mostly retired people who support the local economies in golf and plastic surgery.

“We're going to shift some people around internally, it looks like,” said Jeff Engler, the company's director of product development. “Hard goods is still a priority category for us.”

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