The World: Japan's backroom baron steps into the spotlight

Year.

Although a journalist at heart, Watanabe, 81, has avoided being
interviewed during the half century it has taken to rise to the top of
Yomiuri. Even when he was obliged to step down as the owner of the
Yomiuri Giants baseball team, in 2004, to take responsibility for the
unethical scouting of a young player, he refused interviews.

Then, last year, he initiated Yomiuri's exploration of responsibility
for events leading up to World War II. The public questioning of Japan's
relations with its Asian neighbours sent shockwaves round the world; it
was an about-face for a conservative publication that had been moving
rightward recently, and a vocal stand that put Watanabe on the global
radar.

For the head of the Japanese newspaper, magazine, broadcast, film,
sports, cultural and property development conglomerate, the Cannes Lion
must have come as a surprise.

Even Terry Savage, the Cannes executive chairman, acknowledges the
festival has traditionally looked West rather than East when making the
award. However, he hails Watanabe's contribution to "building one of the
great media organisations in the world" and describes him as "a leader
who has not just embraced press, but also TV, radio and a range of other
media and business initiatives".

But it's still true that Watanabe represents the conservative
establishment rather than the new world. His path from a cub reporter at
the Yomiuri Shimbun in 1950 to Japan's most influential media baron has
been a journey along the inside track of power and government.

After graduating from the University of Tokyo, Watanabe joined the
Yomiuri Shimbun in 1950 and soon made his mark as a political reporter.
Political reporters in Japan succeed by forging close links with
powerful politicians.

The Yomiuri Shimbun - the Yomiuri Group's flagship paper founded in 1874
- claims the world's highest circulation. Sales of its morning edition
top ten million, with another four million sold by the evening
edition.

The bold acquisitions that have created global media organisations in
the West have never played a role in Japan. Compared with the US and
Europe, where the media landscape has been transformed, Japan's media
system has remained surprisingly stable for decades.

Transparency is not high on the Yomiuri Group's agenda. Noting that the
Yomiuri Shimbun is a private company, executives decline to provide any
financial, operating or corporate data that might reveal the group's
overall business performance or ownership.

However, according to Dentsu, Japan's largest communications group,
newspaper ad revenue dropped 20 per cent from 2000 to 2006, while TV ad
revenues fell about 3 per cent. Over the same period, internet
expenditure soared. With advertising a major source of revenue across
the group's many activities, Yomiuri has felt the pinch.

"The Yomiuri Shimbun has faced some difficult times in trying to
increase ad revenue, apparently due to the rise in internet advertising.
Nevertheless, I remain convinced that the Yomiuri Shimbun group will
remain profitable on the strength of our premier colour ads, a
technology that cannot be matched by the internet," Watanabe says.

Even so, he believes the web will play a bigger role in Yomiuri's future
and argues that despite the pressures, the business model and
sophisticated distribution network that sustains Japan's newspaper
industry are robust enough to meet the challenge.

"Furthermore, Japanese newspapers are based on a unique business model -
each copy contains ad inserts tailored for community-specific
circulation on a daily basis. These particular ads are superior to the
internet ad market in terms of sales," Watanabe explains.

Japanese papers are privately owned, a feature Watanabe feels frees them
from shareholder pressures. Even newspaper proprietors traditionally
must defer to editors.

As for global ambitions, while Yomiuri already co-operates with The
Washington Post, Chicago Tribune and others, international expansion
doesn't appear to be on the agenda. Watanabe says: "We do not see any
necessity to invest in, acquire or merge with foreign companies."

THE WATANABE FILE

1952: Political writer, Yomiuri Shimbun

1968: Washington bureau chief

1977: Senior deputy managing director

1980: Managing director

1985: Editor-in-chief

1987: Vice-president, editor-in-chief

1991: President, editor-in-chief

2002: President, editor-in-chief, Yomiuri Shimbun Holdings

2004: Board chairman, editor-in-chief