Tokyo Broadcasting System Inc., a TV and radio broadcaster, will reject a proposal by Rakuten Inc. to integrate their managements under a holding company, sources have said.

According to the sources, TBS will accept a proposal by Rakuten, its biggest shareholder, to form a business tieup, but will reject the integration.

As a precondition for the tieup, TBS will urge Japan's largest online shopping mall operator to substantially reduce its nearly 20 percent stake in the broadcaster, the sources said.

TBS was upset when Rakuten made an integration offer in October after secretly buying a major stake in it.

Its distrust of Rakuten rose after the company raised its stake to just less than 20 percent in late October from 15 percent as of Oct. 13, despite the broadcaster's request that it refrain from buying additional shares following the integration proposal.

TBS will answer Rakuten's proposal, possibly this month, the sources said. Once its stance becomes clear, the one-month standoff over the merger plan could turn into a real showdown. Rakuten has been weighing the possibility of making a tender offer for TBS in the event it rejects the integration.

The sources said that a draft of the written answers compares the possible benefits of a management integration with the benefit of forming alliances with other Internet-related companies.

The Tokyo-based broadcaster concluded that forging close ties only with Rakuten would adversely affect its business because it could lose opportunities to market its news and entertainment programs through other online content providers.

TBS has already formed alliances with Index Corp., Dentsu Inc. and other companies in Internet-related operations, because Japanese broadcasters are, in general, looking to fuse TV and Internet services to survive the Internet age.

TBS, which owns the Yokohama BayStars baseball team, is also likely to claim that Rakuten must give up a chunk of TBS shares because Japanese baseball bylaws prohibit any party from simultaneously holding shares or being involved in the management of more than one ballclub to ensure the fairness of the games.

Rakuten owns the Rakuten Eagles.