MCA DiscoVision

Cash Box
February 13, 1982

DiscoVision Associates Sells UPC Interest To Pioneer Electronics

LOS ANGELES - DiscoVision Associates (DVA), the Costa Mesa-based joint venture between MCA Inc. and IBM, sold its interest in Universal Pioneer Corp. to Pioneer Electronics last week, thus making the latter sole owner of UPC's laser optical videodisc and player production facilities in Japan. Under terms of the agreement, announced Feb. 4, Pioneer of Japan will assume all manufacturing and marketing of both Industrial and consumer players and discs manufactured by UPC.

This most recent move by DVA comes on the heels of the company's announcement that it would close its Carson, Calif. manufacturing plant effective Feb. 26, moving all production to UPC's second generation plant. DVA had earlier announced a cutback of just 20% at its Watson Industrial Park plant in Carson. At the time, company officials explained that the Carson facility had been having problems fulfilling demand whereas UPC's disc operation in Kofu had the increased capacity to take on the additional production.

According to Miller Bonner, spokesman for DVA, Pioneer Electronics' buyout of UPC, like the Carson plant shutdown, is not expected to affect disc production, which DVA officials projected would increase some 250% in first quarter of 1982 as compared with the first quarter of 1981. "That will hold," said Bonner. "Pioneer will honor all DVA customer committments."

UPC's disc facility, located in Kofu, Japan, went on line in May 1981 and was reportedly producing approximately 200,000 discs per month as of last summer. The company's player production plant is located in Tokorozawa, Japan.

However, the Pioneer buyout dramatically alters the fate of DVA. Bonner stated that although DVA will remain a joint venture of MCA and IBM, its only responsibilities now will be management of its portfolio for licensing purposes. As such, DVA will go through a three-to-five month "transition period," after which its staff will have been reduced to between five and 10 employees from approximately 800 prior to its January layoffs.

UPC was initially formed in 1977 as a joint venture of Pioneer Electronics and MCA Inc. DVA took over MCA's 50% ownership of UPC when it was formed in September 1979.

Bonner noted that no terms or conditions of the sale were revealed, but it was known that the decision and ensuing agreement came out of meetings Jan. 31 and Feb. 1 between executives of MCA, IBM and Pioneer Electronic Corp., including Pioneer president Yozo Ishizuka.

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