Company Overview

1. History

Japan BS Broadcasting <9414> was established in August 1999 by Bic Camera <3048> as Japan BS Broadcasting Planning Co., Ltd. Starting with receiving certification for entrusted broadcasting business of BS digital data broadcasting from the Ministry of Posts and Telecommunications (now the Ministry of Internal Affairs and Communications) in December 1999, it proceeded with preparatory work for experimental data broadcasting while acquiring various approvals, and started the full broadcasting of BS digital high-definition broadcasting (current 'BS11') in December 2007.

In 2010, it joined the Japan Commercial Broadcasters Association, and in 2011, it steadily increased its credibility and presence in the satellite broadcasting industry by participating in the contact rate survey conducted by Video Research Co., Ltd. (BS Power Survey; currently BS Household Viewing Survey). Listed on the Tokyo Stock Exchange Mothers Market in March 2014, it was moved to the First Section in March 2015, and in April 2022, it transitioned to the Tokyo Stock Exchange Standard Market due to a change in the market classification of the Tokyo Stock Exchange. Recognizing the public mission of broadcasting and social responsibility, it has set a management philosophy to provide high-quality information that inspires people and contributes to creating a happy society. Also, by broadcasting rich and healing cultural and entertainment programs along with neutral and fair news and information programs, it aims to promise viewers with 'valuable time' as its management vision. The parent company Bic Camera holds 10,930,136 shares (shareholding ratio: 61.37%).

2. Business Model and Revenue Structure

There are free-to-air and pay TV channels in BS broadcasting, but the company focuses on free-to-air broadcasting. In addition to the company, there are five commercial key-affiliated stations, World HyVision Channel Co., Ltd (BS12 Twellv), Open University of Japan, BS Matshita Tokyu, BS Yoshimoto, and BSJapanext conducting free-to-air broadcasting. With the unique feature of being an independent free-to-air broadcaster not affiliated with key stations, in addition to free-to-air broadcasting, it can leverage the strengths unique to independent broadcasters to freely produce and distribute content with TV stations and production companies nationwide.

The company's pillars of revenue, horse racing coverage, anime, drama, and telecommerce programs, ensure a core viewership. In horse racing coverage, it is well-known among the millions of public gambling fans, while in the anime industry, it boasts one of the most significant broadcast times and receives high praise. On the other hand, drama targets the F3 layer (women aged 50 and over) and F4 layer (women aged 65 and over), overlapping with telecommerce programs. Therefore, by scheduling telecommerce programs close to the drama broadcast time, it aims to maximize the advertising effect. Furthermore, to satisfy the intellectual curiosity of the key senior viewers, the company has a rich lineup of self-produced programs focusing on culture, education, and documentaries. By clearly segmenting viewer targets by day of the week and time slot, they attract viewers from a wide range of age groups compared to other commercial satellite BS stations. Moreover, as a subsidiary of Bic Camera, an electronics retailer, it has the capability to utilize direct contact points with consumers in addition to broadcasting programs and commercials.

(1) Structure of Income

The revenue structure of the company that provides free broadcasting is mainly based on advertising income (sponsor income), which is similar to terrestrial television stations in this respect. In BS broadcasting stations including the company, there is a feature of narrowing down the target according to the needs of advertisers, using "explanatory type" commercials focused on products and services to thoroughly appeal the attractiveness of the products. In other words, while the "advertising slots" are the company's products, they can be subdivided into time slots, bringing slots, and direct response program slots, etc. The company itself classifies the breakdown of individual operating income into time income, spot income, and other income, with time income accounting for 72.7%, spot income 20.0%, and other income 7.3% for the fiscal year ending August 2024. Moreover, the other business income includes revenue from content sales, the official YouTube channel of "BS11", "BS11+", income from the expansion of distribution platforms such as FOD, U-NEXT, Tver, etc., event business income, etc.

Since its founding, the company itself has been operating its business in a single segment of BS broadcasting. However, in January 2018, the company acquired all the shares of a children's book specialized publishing company called "Rironsha Co., Ltd." and "Kokudo-sha Co., Ltd.", turning them into consolidated subsidiaries. As a result, starting from the second quarter of the fiscal year ending August 2018, the company transitioned to consolidated financial statements. Due to the significant scale of the combined sales of the two consolidated subsidiaries, it is appropriate to analyze the individual performance of the company itself in order to accurately and chronologically grasp the trends of BS broadcasting business. The company also discloses the analysis results focusing on individual performance in its information disclosure.

The sales trends of advertising slots, the source of revenue for the BS broadcasting business, are influenced by advertising market conditions, as well as awareness and viewership ratings. In practice, advertisers, in search of greater advertising effectiveness, choose broadcasting stations and programs based on results of surveys like the BS household penetration rate survey and national BS viewership rate survey. Since 2017, in addition to YouTube distribution of regular programs and special programs, various video contents (free and paid) such as catch-up distribution of programs broadcast on "BS11" in the past, popular programs, live streaming of events, and original contents are provided on the platform "BS11+" to attract users with a strategy.

(2) Cost structure

In BS broadcasting, it is possible to broadcast simultaneously to approximately 45.124 million households nationwide via broadcasting satellites, thanks to 1) the ability for the same broadcast to be viewed by approximately 45.124 million households throughout the country (in the fiscal year 2019, it is said to correspond to approximately 77.1% of the total national households of 58.52 million households) at all times, and 2) the significantly different cost structure from terrestrial broadcasting, enabling a highly efficient advertising business. One of the major features is the ability to mention the two.

There is a significant difference in cost structure between BS broadcasting and terrestrial broadcasting. In the case of terrestrial broadcasting, a mechanism of delivering radio waves using a relay method known as the "bucket relay method" via broadcast transmission towers in various locations and through relay stations, resulting in network maintenance costs accounting for a large proportion of the cost. In the case of BS broadcasting, there are no network maintenance costs as it directly sends radio waves to nationwide viewing households from broadcasting satellites. However, broadcasting-related costs such as broadcasting commission fees and technology costs are incurred, but there is a considerable difference in broadcasting costs between terrestrial broadcasting and BS broadcasting.

The difference in cost structure between BS stations and terrestrial stations is directly reflected in the price difference of the "product" of the broadcasting stations, which is the advertising slots. As a general rule, it is said that the advertising unit price is 10 to 20 times different between BS broadcasting and terrestrial broadcasting. However, due to the low broadcasting costs of BS broadcasting, even with such low advertising unit prices, it is thought that the profit margin of BS broadcasting stations exceeds that of terrestrial broadcasting stations.

A characteristic concerning costs is that strict cost control is being implemented. The major cost items of the company are divided into three: "program-related costs," "broadcast-related costs," and "advertising-related costs", of which the "broadcast-related costs" have been extremely low and stable as a feature of BS broadcasting. For "program-related costs" and "advertising-related costs", a certain level in relation to sales is set as a guideline and controlled within that range. Such strict cost control is also attributable to the low-cost structure unique to BS broadcasting.

(Writer: FISCO analyst Tomoichi Murase)