Craft fair rules, transparent system for foreign capital in broadcasting

Editorial

December 8, 2021

How can a situation be prevented in which a broadcasting business is controlled by foreign capital? The central government must fully understand the actual situation and strive for fair and transparent regulations.

An expert panel of the Internal Affairs and Communications Ministry has drawn up a draft report on its review of regulations on foreign investment in the broadcasting sector. The main point of the draft report is to oblige broadcasters to regularly report to the government the ratio of voting rights held by foreign investors in them. The government intends to submit a bill to revise the Broadcast Law to the ordinary Diet session next year.

The law stipulates that the voting rights of foreign investors should be less than 20% of the total. Radio frequencies are the common property of the people. Regulations should be strictly operated so that management and program content are not swayed by foreign capital.

Under the current system, however, a broadcasting operator only has to self-report the percentage of the voting rights when applying to the government for approval to engage in broadcasting. In addition, the government only confirms those voting rights when their broadcasting business licenses are renewed every five years, in principle.

In the spring of this year, it was revealed that the voting rights of foreign investors in broadcasting-related company Tohokushinsha Film Corp. and Fuji Media Holdings Inc. — the latter of which has Fuji Television Network Inc. and other firms under its umbrella — had temporarily exceeded the 20% limit in the past.

It can be said that a situation has come to light in which regulations on foreign capital can easily be evaded.

The panel’s draft report on its review of the regulations calls for legally requiring broadcasters to report to the government any major changes in the voting rights ratio, in addition to periodic mandatory reports.

The communications ministry plans to appoint a special inspector in charge of work to regulate foreign investment in broadcasting and telecommunications businesses. It is hoped that the government will establish an effective monitoring system in this regard.

Fairness in applying the regulations is also important. In May this year, the ministry revoked the approval for satellite broadcasting that it had granted a subsidiary of Tohokushinsha on the grounds that Tohokushinsha had a foreign investment ratio of more than 20% as of 2017, when it received the approval.

On the other hand, the ministry only issued a stern warning to Fuji Media Holdings, saying that its violation had been resolved when the company reported the ratio to the ministry.

However, there has been criticism against the ministry’s uneven treatment of the two companies. Experts pointed out that there is a defect in the current system, in that intentionally delaying the reporting of violations could be used to avoid cancellation of license approval.

According to the draft report, even if the ratio of foreign investment exceeds 20%, the ministry will not immediately revoke the approval. It will instead ask broadcasters to correct the situation within a certain grace period.

Under the current system, even minor violations, such as those caused by clerical errors in calculation, are subject to revocation of approval as soon as they are found. It would be realistic to correct the situation while allowing them to continue broadcasting.

The excessive wining and dining of ministry officials by Tohokushinsha also became a problem. Even though a lack of transparency in the existing system may have contributed to this, it is also essential to establish a fair system to eliminate collusion between the public and private sectors.

— The original Japanese article appeared in The Yomiuri Shimbun on Dec. 8, 2021.