Fuji Media Holdings Inc., the parent company of major broadcaster Fuji Television Network Inc., was found to have violated foreign investment regulations under Japan's Broadcasting Act.
The legal procedures are intended to protect Japan's broadcasting using radio waves -- which is the public's common assets -- from the influence of foreign capital. The law requires domestic broadcasters to keep the ratio of voting rights held by foreign shareholders to less than 20%. Broadcasters breaking this rule can face revocations of their licenses.
According to Fuji Media Holdings Inc., a certified broadcasting holding company, foreign stakeholders controlled a little over 20% of its voting rights between 2012 and 2014.
The problem here is that the government did not rescind the firm's license even despite the legal violation.
While Fuji Media Holdings corrected the irregularities and reported the misconduct to the government in December 2014, the Ministry of Internal Affairs and Communications -- which oversees Japan's broadcasting businesses -- did not go further than giving a verbal warning to the broadcaster.
Communications minister Ryota Takeda explained that his ministry decided it could not revoke Fuji Media Holdings' license because the state of illegality had been resolved by the time of the firm's reporting to authorities. He said the ministry based its decision on legal interpretation provided by the Cabinet Legislation Bureau in 1981.
Meanwhile, broadcasting company Tohokushinsha Film Corp. is set to have its subsidiary's license revoked because it violated the foreign investment regulations at the time it applied for satellite broadcasting licensing.
Voices questioning the difference in the government's handling of the two cases are growing. While the communications ministry has stressed that its response to Fuji Media Holdings was appropriate, such a stance could give rise to the misconception that broadcasters could be spared punishment if they procrastinated reports on their legal offenses, thereby allowing the cover-up of facts to go unchallenged.
What's even more problematic is that the ministry has not released documents chronicling its exchanges with Fuji Media Holdings over the matter and how and why it ended up settling the case just with a verbal warning.
It has emerged during Diet deliberations that Fuji Media Holdings' legal breach had not even been reported to the communications minister at the time. The ministry may well deserve suspicions that it attempted to settle the matter in secret.
The ministry has the responsibility to swiftly investigate the facts and check whether it had cozy ties with Fuji Media Holdings, and publicly release the findings.
The set of facts surrounding Fuji Media Holdings' legal contravention had not been announced until early April. As a listed company, Fuji Media Holdings should have released the facts when it found out the wrongdoings. The communications ministry also had a lack of awareness.
Minister Takeda has indicated his intention to consider legal revision, claiming that Fuji Media Holdings' case has shed light on flaws in the legal system and shoddy screenings over foreign investment regulations.
However, what is called into question is the transparency of broadcasting administration itself. The communications ministry has earlier come under fire over the revelation that its officials were wined and dined by businesses it supervises. Unless the ministry offers explanations that can convince the public, it wouldn't be able to recover their confidence.