Cable and broadband broadcaster Usen Corp. has revealed itwill not acquire film producer and distributor Nikkatsu from its parentcompany, game maker Namco.

The deciding factor was reportedly strong opposition fromthe Nikkatsu labor union. In an interview with the Nihon Keizai Shimbun, a Usenofficial said that the company no longer "expects to derive any synergiesfrom the transaction," even if were towin out overunionopposition.

Last April Usen announced that it intended to acquire a 51%stake in Nikkatsu by purchasing 70.69 million shares in the company from Namco.Its principal target was Nikkatsu's library of nearly 7,000 films and othervideo content, including films fromits glory days in the 1950s and 1960s,when it was a major studio.

The union objected, however, saying that Nikkatsu workerswould derive no benefit from the sale. In May the union went on strike with thesupport of nearly 200 or 80% of Nikkatsu employees.

Usen distributes video, music and other content via cableand broadband, including the ShowTime fee-based service and the new GyaO freebroadband service.

In September 2004 the company acquired Gaga Communications,a leading independent distributor with a large library of Hollywood and otherforeign films.

Namco is still reportedlyinterested in finding a buyerfor Nikkatsu, as part of its policy of concentrating on its core game business.