Dentsu heads for stock market

Dentsu dominates the Japanese media world

Dentsu, by far Japan's most influential advertising agency, will achieve a stock market capitalisation of about $4.74bn when it is floated in Tokyo at the end of the month.

The firm has set a launch price of 420,000 yen per share, at the top end of analysts' expectations, making the flotation Japan's largest by market value this year.

The agency predicts the flotation will raise 10.5bn yen (£60.2m; $85m) for investing in overseas operations, and in new technology for developing content.

Dentsu's owners, include Japan's two main news agencies, Jiji Press and Kyodo News, are also using the listing as an opportunity to bolster their own coffers amid a tough financial climate.

Only 25,000 of the Dentsu shares being offered are new. The other 110,000 are coming from the current owners, bringing in more than 40bn yen.

Ruling the roost

Like most advertising companies around the world, Dentsu is feeling the pinch of the contraction in the global media market.

But it is still making money. While profits this year are likely to fall by a quarter compared with 2000, that still leaves earnings of about 30.46bn yen.

The firm's resilience is credited mostly to its market clout. Dentsu is the fourth biggest agency in the world by billings, and claims one quarter of Japan's advertising market.

The company's billings outstrip those of its four biggest domestic competitors combined.

Dentsu controls half of prime-time TV ad spots

Furthermore, as a media buyer it controls half of Japan's prime-time TV advertising spots - a far greater proportion than, for instance, its bigger US rivals do in their home market.

And the tightly owned nature of Japan's media - mainstream TV and newspaper and magazine publishing is largely in the hands of just five major companies - means Dentsu's control is amplified.

In comparison, its competitors are struggling.

The country's number three agency, Asatsu-DK, made a loss last year, and is facing the prospect of seeing institutional investors sell its shares in order to buy into Dentsu.