Suddenly, Ohga Positioned to Lead Surge on Sony’s Entertainment Side : Media: Morita’s illness frees the CEO to concentrate on conglomerate’s music and video holdings, observers say.

TOKYO —  Norio Ohga first came to Sony Corp.’s attention 35 years ago with a series of letters complaining about the quality of the firm’s tape recorders. The former baritone singer was hired in 1959 to help improve the product and became such a success that he rose to president and chief executive.

But his lifelong passion for music--highlighted this spring when he conducted the Metropolitan Opera Orchestra in a benefit performance at New York’s Lincoln Center--suggests that Ohga’s heart lies in the software side of the business instead of with the hardware from which Sony gained its fame.

Now, with Sony co-founder and Chairman Akio Morita suddenly sidelined by a cerebral hemorrhage that required brain surgery Tuesday, Ohga may put more emphasis on Sony’s music and video production businesses.

While Morita engineered the purchase in the late 1980s of CBS Records and Columbia Pictures, Ohga, who took over as chief executive in 1989, has been more aggressive in trying to build up Sony’s entertainment properties.

Morita has always loved new electronic gadgets, but Ohga’s leanings were illustrated at a New Year’s reception two years ago, when, in a 15-minute toast, he barely mentioned the company’s hardware.

Instead, he lavished praise on Steven Spielberg’s “Hook” and Barbra Streisand’s “Prince of Tides,” as well as the commercial success of Michael Jackson’s “Dangerous” album--all Sony software products.

Yet Sony faces difficult times. Battered by recession in Japan and the steep rise in the value of the yen, its consolidated net income for last fiscal year, which ended March 31, plunged nearly 70% to $312 million, on total sales of $34.4 billion.

Results for Culver City-based Sony Pictures Entertainment--which includes Columbia Pictures, Tristar Pictures and Sony Classics, along with television and video divisions--was one of the bright spots. Revenue from these operations jumped 24% to $3.1 billion.

As a powerhouse in both hardware and software, why hasn’t Sony been more successful?

One problem, according to some analysts, is that Sony has not been very effective in meshing its consumer electronics hardware and its entertainment software to compete in the new multimedia era.

While the 72-year-old Morita and Ohga, 63, have generally functioned smoothly as a team in recent years, there have been indications that they do not fully agree on how to strike the balance between Sony’s various parts.

*

However, Japan’s top financial daily, Nikkei Shimbun, said Friday that if Morita’s “illness is lengthy, his influence will weaken and President Ohga’s power will grow. If so, pressure against going too far in the software business will be lifted, and it’s possible that the strategic emphasis on the software side will become even more clear than now.”

Said Koichiro Chiwata, an electronics industry analyst at Salomon Bros. Asia Ltd.: “I think Mr. Ohga’s responsibility is going to be quite significant. . . . I recall that Mr. Morita was showing some lack of satisfaction with Mr. Ohga’s performance so far, after the Columbia acquisition, and the merging of software and hardware. I think that’s asking a bit too much in the current environment.”

Ohga has run Sony for at least the past year or two, while Morita has focused his attention on being an international statesman, speaking out in favor of improved U.S.-Japan relations and for structural changes in Japanese corporations.

“What (Morita) has tended to concentrate on is a wider public role as a kind of business ambassador between the U.S. and Japan in particular, but also with Europe,” said Andrew House, a Sony spokesman.

If Ohga gains a stronger hand in Morita’s absence, one strategy he might pursue is an alliance with a telecommunications firm. In recent months, under Ohga’s leadership, Sony has expressed interest in selling a minority share in its entertainment operations to a major cable television operator or a Baby Bell if the price were right.

The battle for Paramount Communications Inc. has highlighted the value of Hollywood studio ownership. Some U.S. critics who thought Sony paid too much for Columbia are having second thoughts.

The trick will be for Ohga to pull it all together. Some observers think he’s the right person for the job.

*

“Mr. Ohga is very suitable for the software business,” said Katsuhiko Sugiyama, an electronics industry analyst at Merrill Lynch Japan Inc. “Sony is aiming for synergy between software and hardware. It’s a very good scheme and very good exposure for Sony. . . . Japanese know (Columbia Pictures) is a very good resource for Sony long-term.”

Ohga seems to have his own vision for how to handle the task of merging the somewhat unwieldy Sony empire to compete effectively in a multimedia world.

“A corporate manager,” he once explained, “is like an orchestra conductor.”