Restoring Integrity: A Call for Leadership and Governance Overhaul

In the wake of the Masahiro Nakai scandal, the leadership at Fuji Television is under intense scrutiny. On February 5, Ryunosuke Endo, Vice Chairman of Fuji Television and head of the Japan Commercial Broadcasters Association (JBA), declared his intention to step down. This decision underscores the mounting pressure on executives to take responsibility for the mishandling of the incident. Despite efforts to address public concerns, including a marathon press conference, trust in the company continues to erode.

American Investment Firm Demands Accountability

Rising Sun Management, an affiliate of Dalton Investments holding 7% of FMH shares, has issued a stern letter demanding sweeping reforms. The firm argues that the measures announced during the January 27 press conference fall short of restoring confidence in the company. Rising Sun emphasizes that the departures of key executives, while significant, will not suffice to win back sponsors or repair the company’s image.

The investment firm questions the effectiveness of the reforms and highlights the need for more substantial changes. They argue that the company must go beyond superficial gestures and implement meaningful governance improvements. Without such changes, they warn, the financial repercussions could be severe, as evidenced by the withdrawal of over 70 advertisers following the initial press conference.

Hieda's Influence Under Scrutiny

Critics have zeroed in on Hisashi Hieda, FMH’s 87-year-old executive managing advisor, as a focal point for reform. Although not directly implicated in the scandal, Hieda is seen as wielding considerable influence over the company. His absence from the January 27 press conference raised eyebrows, leading to calls for his resignation. Some observers argue that his long-standing presence has contributed to a dysfunctional corporate culture.

Renowned corporate governance lawyer Shin Ushijima noted that Hieda’s role as an executive managing advisor grants him access to board meetings, potentially allowing him to shape decision-making processes. “A person with top management experience can significantly influence the board’s atmosphere and, consequently, the company’s culture,” Ushijima explained. Rising Sun’s letter explicitly calls out Hieda’s alleged “absolute control” over the board, questioning how such influence has been allowed to persist for decades.

Reforming Corporate Governance Structures

Beyond individual resignations, Rising Sun’s letter insists on comprehensive governance reforms. The firm asserts that FMH has a duty to shareholders to overhaul its governance framework. Independent directors, it argues, must assert their authority as custodians of the company’s assets. The scandal has exposed critical failures in compliance and response protocols, highlighting the urgent need for systemic changes.

Fuji TV had previously established guidelines for handling cases of unfair discrimination and human rights violations. However, these policies were not adequately enforced in the Nakai case, leading to widespread criticism. The company is now awaiting the findings of a third-party investigation committee before implementing further reforms. In the meantime, a new "Revitalization and Reform Project Headquarters" has been established to drive internal changes, focusing on improving corporate culture and enhancing whistleblower protections.

The Financial Fallout and Sponsorship Challenges

The scandal has taken a heavy toll on Fuji TV’s finances. Since the allegations surfaced in January 2025, over 70 sponsors have pulled their advertising, resulting in a projected 74% drop in net profit for the fiscal year. Local reports indicate that FMH’s net profit is expected to plummet from ¥29 billion ($189 million) to ¥9.8 billion ($64 million). While some companies, like Kinliser, have expressed willingness to resume commercials, the majority remain cautious.

Kinliser’s decision to re-engage with Fuji TV reflects a nuanced approach, emphasizing the importance of listening to sincere efforts toward reform. The company’s statement on X highlights the need for constructive engagement rather than knee-jerk reactions based on speculation. As Fuji TV works to rebuild trust, the support of even a few loyal sponsors could play a crucial role in its recovery.