One of Japan’s biggest media companies is under pressure from major shareholders and suffering an exodus of advertisers over its handling of allegations involving one of the country’s best-known television stars.
The crisis at Fuji Media Holdings pushed its long-languishing shares to a nine-month high earlier this week following speculation that it might be forced to replace its management and sell non-core assets.
Fuji Media held an emergency board meeting on Thursday after 80 advertisers, including Toyota, McDonald’s, 7-Eleven and SoftBank, said they would pull adverts from its TV channel.
A group of activist investors in the company has accused it of failing to respond adequately to a scandal involving Masahiro Nakai, a 52-year-old former star in the boy band SMAP who dominated Japan’s celebrity-rich primetime schedule, and an unidentified woman.
The Shukan Bunshun magazine reported in December that Nakai made a substantial settlement payment to the woman following an incident of a sexual nature at a 2023 dinner, which it said had been organised by a Fuji Television Network employee.
In a statement posted on his management agency website this month, Nakai acknowledged there had been “trouble” with a woman and that it had “all resulted from my shortcomings”. However, Nakai said reports that he had employed violence and that a third person was involved were untrue.
On Thursday, in a message posted on a private website for his fans, Nakai said he was leaving the entertainment industry. His company, Nonbiri Nakai, would be wound up shortly, his statement added. Nonbiri Nakai did not respond to a request for comment.
Nakai has been a major presence on Fuji TV schedules for almost three decades, but the company’s initial muted reaction to the allegations outraged a group of activist shareholders representing funds under hedge fund Dalton Investments, which holds more than 7 per cent of its shares.
The group sent a letter to its board on January 14 demanding greater transparency. Fuji TV convened a press conference three days later, but limited access to a few Japanese outlets and did not allow filming. Access to a further press conference on Thursday was also limited.
After the emergency meeting on Thursday, the boards of Fuji Media and Fuji TV announced there would be a fully independent third-party investigation into the affair. Koichi Minato, president of Fuji TV, had previously promised a third-party probe but had been unable to confirm that only outside experts would be involved.
The company has said the investigation will look at whether one of its employees was involved in setting up the dinner.
Long-term investors said Fuji Media’s response to the scandal was symbolic of a broader governance crisis at the company, which they accuse of having ignored shareholder interests for decades.
David Mitchinson, co-founder of Zennor Asset Management, whose fund holds more than 1 per cent of Fuji Media shares, said the company had suffered a “profound governance failure”.
“Fuji’s handling of this incident has raised the suspicion that it has allowed a culture of moral corruption to exist for years, and that this culture was tolerated by its most senior people,” Mitchinson said.
In a second letter to Fuji Media, Dalton Investments affiliate Rising Sun Management on Tuesday condemned the company’s press conference as “an object lesson in how not to handle crises like the current one”.
The letter called for another press briefing that all media could attend and a fully independent investigation that would “go wherever the evidence of wrongdoing leads” beyond the Nakai case.
Fuji Media said: “We categorically reject the view that Fuji Media Holdings condones moral corruption. We have always been aware of the public nature of broadcasting and its social mission, and we take very seriously our mission to be faithful to our viewers and society.”
The advertiser exodus has forced Fuji TV to fill hundreds of vacated commercial break slots with public service advertisements. However, even after an almost 8 per cent fall on Thursday, shares in Fuji Media have still risen more than 10 per cent in recent days over speculation the scandal could spur asset disposals or even a break-up of the company.
The company, which has historically wielded huge political influence and has felt protected from activism and takeover because of government restrictions on media company ownership, trades well below book value.
Investors believe a complete overhaul of management and governance would unlock trapped value, and they see the Nakai scandal as a rare opportunity to force change.
Fuji Media owns real estate assets including an office tower in Tokyo’s Otemachi financial district and a large portfolio of stock in other listed Japanese companies.
The hundreds of vacated advertising slots had all been paid for in advance, meaning the short-term financial hit of the crisis will be limited. But some analysts warned its longer-term effects could be severe.
“Our focus going forward will be on whether terrestrial advertising clients continue to place ads, including when the time comes to renew contracts,” said Ryohei Harahata, a media analyst at Nomura Securities.
Large Japanese companies had been itching to renegotiate advertising rates amid falling viewership, said the head of one large agency in Tokyo.
The scandal at Fuji Media — whose content leans heavily on variety, chat and game shows — has reignited debate about what victims say is institutional blindness in Japan’s media industry to sexual harassment and coercion of younger employees by some senior executives.
In 2023, scores of young male performers accused the founder of talent agency Johnny & Associates of decades-long sexual abuse and said TV companies had looked the other way.
At last week’s Fuji TV press conference, Minato said the company first became aware of the incident involving Nakai in June 2023 after another employee noticed a change in the woman’s condition. The woman was examined by a doctor and another specialist, and Fuji TV decided not to make the matter public, he said.
Priority was placed on the woman’s physical and mental health and the company did not want to launch an investigation or conduct a formal interview with Nakai for fear of breaching her privacy, Minato said.
Fuji Media said the company “does not tolerate harassment or inappropriate behaviour in any form and is committed to creating a safe and inclusive work environment”.
