AMID the hoopla about "multimedia," about Bell Atlantic's plan to merge with Tele-Communications Inc. and about the QVC-Viacom bidding battle for the Paramount movies-to-books conglomerate, an important lesson is being missed.
Like most management lessons these days, it comes from Japan. But this is different from all other Japanese management lessons. This one is about how not to do it.
That the lesson was painfully learned in Japan is shown by a simple fact: Among all the firms battling for Paramount, not one is Japanese.
Three years ago, the only place any sensibly greedy Hollywood studio would look for a buyer or for backing was Japan.
After all, in 1989 Sony paid $3.4 billion for Columbia Pictures, owner of the Columbia and Tri-Star studios, and in 1990 Matsushita paid $6.1 billion for MCA, owner of Universal Studios -- still the biggest-ever Japanese takeover in America.
These and other Japanese consumer electronics companies were rolling in money.
They were full of ambition spurred by arrogance -- ambition to get hold of the movies and music that might drive the sales of their electronic hardware, arrogance that their success in dominating consumer electronics meant they could win any battle.
Cash, ambition, arrogance -- with clues like that, Hollywood can spot a fool and his money even before he has ridden over the horizon.
When Sony bought Columbia, the media went crazy. Newsweek's cover talked of Japan's invasion of Hollywood. Yet less than two years passed before it became clear that the scares and hyperbole had got it wrong. Far from taking over in Hollywood, the Japanese were mugged.
It was as if these masters of management had gone bananas. Both paid sums that were almost universally considered extravagant. To head its new business, Sony hired two film producers, Peter Guber and Jon Peters, who had plenty of movie-making experience but none in running a big company.
To get them, Sony had to buy their production firm for $200 million and it had to buy out a contract they had with Warner Brothers for an undisclosed sum reputed to be $500 million.
Sony gave Mr. Guber and Mr. Peters a deal that was lavish even by Hollywood standards: annual salaries of $2.75 million and a bonus pool for them and five underlings worth $50 million, plus 8 percent of any rise in Columbia's notional value over five years.
Recently, Mr. Guber's contract was renewed for three more years (Mr. Peters left in May 1991), quelling rumors of a management shake-up at what is now a deeply troubled company. Despite these troubles, Mr. Guber's bonus pool is still filled.
In all, including its assumption of Columbia's debts and the cost of renovating studio facilities, Sony shelled out at least $5 billion for Columbia from 1989 to 1991. That was in addition to the $2 billion it had already paid in 1988 for CBS Records.
At MCA, the story was less glamorous, for Lew Wasserman's firm had always been a more secretive and discreet operation than is typical in Tinseltown. But the outcome has been the same: Matsushita paid way over the odds and is struggling to get its money back.
Neither Sony nor Matsushita is likely to get a decent return on its investment in Hollywood in this century, if ever. Not that their purchases are losing money: Columbia (renamed Sony Pictures) and MCA are doing moderately well.
This year, Sony Pictures and Sony Music combined may contribute operating profits of up to $800 million. Yet the interest and debt servicing on the $7 billion-plus Sony spent to acquire them wipes those profits out.
The lessons? First, padlock your pocketbook when getting off the plane at Los Angeles. Second, the only winners in the Paramount deal will be Paramount's shareholders and any managers who are bought out (or bought in). Third, the Japanese "invasion" of U.S. business has been no such thing.
Even the best Japanese companies have made spectacular and costly mistakes and have not taken control even of the businesses they purchased, let alone of culture or technology.
Matsushita has delegated control over 7 percent of its sales to Americans at MCA, Sony more than 20 percent of its sales to Americans in New York (music) and Los Angeles (movies).
Sony is in court battling George Michael and has the headache of sexual-abuse accusations surrounding Michael Jackson, with whom it has a $50 million contract.
Wouldn't it have been easier to stick at home making Walkmans?
Bill Emmott is editor of the Economist and author o "Japanophobia: The Myth of the Invincible Japanese."