Initiatives during first three years as president
Immediately upon assuming the presidency, I began to examine the future sustainability of SKY Perfect JSAT’s business model. As someone who has been engaged in the work related to social infrastructure for many years, it didn’t take me long to understand the business model of the Space Business. On the other hand, in the case of the Media Business, although I was not an expert in this field, I felt we could no longer afford to ignore our lack of profitability awareness and lack of medium- to long-term vision under the outmoded idea that the quantity of content is all that matters despite the rapid spread of video distribution.
With regard to the Space Business, although it was earning stable revenues, it had a strong tendency to rely on existing satellite broadcasting and the use of BCP, and I felt that from the perspective of growth, we should take the next step as soon as possible. In order to solve each of the business challenges, to which someone who came from an outside field places particular importance, one by one for the future growth, we have been engaged in intense business selection and concentration over the past three years. In particular, in the Media Business, we have been exiting from unprofitable businesses, and in the Space Business, we have been working to create a new foundation for growth.
Announcement of vision for 2030
Following the COVID-19 pandemic, unpredictable global developments, such as the increasing geopolitical risks in Russia and Ukraine, are affecting the Company directly and indirectly. In comparison, the industry changes around us are predictable to some extent, but the speed is greater than we expected.
In the Media Business, there are so many players that it is no longer possible to make a profit simply by having popular and high-quality content. This trend will only intensify, not subside.
Since it is difficult to survive relying solely on satellite broadcasting, we are being forced to transition to a broadcasting and distribution platform business for content providers based on fiber to the home (FTTH), video distribution conduits, and media center infrastructure.
Meanwhile, in the Space Business, various forms of space utilization are starting to advance. Therefore, we need to evolve beyond owning and operating satellites that support social infrastructure to provide a diverse communications infrastructure that meets changing needs, while leveraging our more than 30 years of accumulated experience in the field of space and satellite services.
Joint venture with NTT
Considering the future possibilities of the Space Business, there are limits to what can be achieved with an investment of over ¥200 billion by 2030. Therefore, with the aim of developing a new information and communications technology (ICT) infrastructure in space, we have established Space Compass Corporation, a new joint venture with NTT Inc. that will leverage the technologies, human resources, and business bases of both companies in a complementary manner. Specifically, we aim to contribute to the development of the global space industry and the realization of a sustainable society by taking on the challenge of building new infrastructure, starting with the optical and wireless communication network to be built in space and the mobile network to be built in the stratosphere. Our strengths in this area are not only our ability to develop satellites and systems as a business, but also our knowledge and industry relationships as a satellite operator, including frequency and radio station licensing and communications satellite and network operations.
The capital contributions to Space Compass Corporation are 50% for NTT Inc.and 50% for SKY Perfect JSAT Corporation so that neither party can take the initiative and proceed unilaterally. This business has a very bright future and I am confident that it can become a big business with the participation of various players, with the possibility of furtherpartner investment in the future.
The future of the Media Business
In the Media Business, I believe it is important for us to think about what to do after recognizing that we are no longer a content provider. Even with fewer subscribers, there will always be a role for satellite broadcasting as a means of delivering content, and the number of content providers continues to grow. In addition to our broadcasting and distribution resources, we have many years of expertise in satellite broadcasting. I believe that the only way to achieve further growth in the Media Business is to make effective use of these resources and know-how and find new opportunities.
Therefore, we are aggressively investing and collaborating in the development of streaming devices and apps, advertising platforms, video distribution technology, and systems technology for data management and content databases. I am aware that there are concerns from the outside about our decision to invest more than ¥50 billion in the Media Business and whether it is appropriate to invest that much. However, this is not an investment in content, but an investment needed to transform the Company into an infrastructure company for media-related services, including business investment (equity) and alliances. As for the infrastructure for video distribution, we are beginning to rebuild our media center, and we hope to use existing facilities and technologies to reduce risk and ultimately become a hybrid between a content provider and a media services infrastructure company that is sought out by our partners.
SKY Perfect JSAT’s social significance
Our vision for 2030 is, of course, not only to increase our economic value but also our social value. As a “Space Business Company” with space and media as its business domains, the SKY Perfect JSAT Group has an important social responsibility to provide a broadcasting platform and communications infrastructure through artificial satellites. As we move toward 2030,I believe this role will become increasingly important, and we will continue to transform ourselves to become even more indispensable to society.
In addition, as the company is listed on the Prime Market, we pay close attention to our stock price, and our policy is to continue to pay a stable dividend while buying back our shares on a flexible basis. As for the stock price, it is one indicator of our corporate value measured from an external perspective, and I tell all our officers and employees to be conscious of it. The stock price of a company with little growth potential or no future will not rise. Furthermore, a com pany that cannot grow will not attract the necessary human resources and influential partners. I see the stock price as a mirror of how external stakeholders see our growth. A P/B ratio of less than 1x is out of the question. We should be aware of the stock price as an indicator of how our actions are evaluated externally, and this is why it is important to achieve growth.
Human resource transformation
To achieve our vision for 2030, each one of us must act with a strong will to change the Company with speed & action in mind, which we call REPOWERING. I believe such a “human resource transformation” is critical. To this end, we will focus on recruiting and training human resources as well as optimally assigning them to realize our business vision.At the same time, I believe that in order to draw out and make full use of their abilities, we need to break through the rigidity of our vertically organized structure, which is why we have newly adopted system of cross-functional team (CFT) to promote vertical and horizontal organizational collaboration.We select someone motivated as the team’s leadership. I hope to revitalize our human resources and improve our organizational mobility.
Unlike energy companies and materials manufacturers, we consume only a small amount of energy ourselves, so even if we were to reduce energy consumption to contribute to the environment, our impact would be limited. By their very nature, satellite communications operate with about one-third of the power consumed by terrestrial lines and are becoming even more energy-saving over time. In addition, in January 2021, our Yokohama Satellite Control Center (YSCC) and (SPE) switched to entirely renewable energy sources, and the remaining sites arealso in the process of making the switch.
Meanwhile, in terms of contributing to the environment through our business, we hope to advance new and impactful initiatives with the potential to contribute to the supply of renewable energy, such as predicting the amount of sunshine for solar power generation and providing communications for wind power generation.
Governance to achieve growth
So far, we have strengthened governance by appointing multiple outside directors and establishing the Nomination & Remuneration Committee as an advisory body to the Board of Directors. Furthermore, with regard to the remuneration of the Company’s officers, we have established fixed remuneration, performance-based remuneration, and stock compensation that take into account appropriate incentives to improve performance and increase corporate value over the medium to long term. The amounts are decided based on the recommendations of the Nomination & Remuneration Committee.
In this way, we have put in place the governance measures that are generally expected.However, I believe that what is necessary for future growth is to make decisions on appropriate risk-taking with even greater speed, and to accomplish this, it is important to reform the mindset and behaviors at the executive officer level in the Group companies.
Frankly speaking, even at this stage, there is still a conservative atmosphere within the Company, and I believe that this needs to change. Previously, the Company guaranteed a fixed term of office for executive officers, but this has been changed to a one-year term, similar to that of directors. In doing so, we encourage self-transformation and leadership by having officers reaffirm their commitment to generating certain results and tackle growth-oriented management tasks. In addition, by taking measures such as increasing the allocation ratio of compensation paid in shares to executive officers, we are trying to raise their awareness of the importance of having the same perspective as shareholders and improving corporate value.
I believe that now is precisely the time for SKY Perfect JSAT to decisively strengthen its governance. In a rapidly changing industry, we need people who can diagnose a problem and take the next step, not rigid perfectionists who refuse to act until they know 100% of the answer. I want people who are flexible enough to move the Company forward even if they only know 60% of the answer, and frankly, if they cannot do this, they should leave. Of course, the same applies to me.
To our stakeholders
In Japan, the SKY Perfect JSAT Group is known mainly for its SKY PerfecTV! brand, and JSAT, despite being in the space business for over 30 years, is not as well known. Overseas, in contrast, the JSAT brand is strong but few people know SKY PerfecTV!. This is the reality of our image. We have announced our vision for 2030 to break away from this situation and let all of our stakeholders know exactly where we are headed going forward.
In order to realize our vision, it is imperative that we take on new challenges while clarifying where and how we will invest our funds, human resources, and time, while at the same time establishing a track record of achievements. In so doing, we will transform into a unique and attractive company with both a Space Business and a Media Business, a company that takes on new challenges and shines brightly. To our stakeholders, I truly appreciate your valuable opinions, even if they are some times tough to hear, and I look forward to your continued support in these endeavors.