Ministry to review foreign capital regulations in broadcasting, telecommunications businesses in Japan

The Yomiuri Shimbun

11:14 JST, May 19, 2021

The Internal Affairs and Communications Ministry plans to overhaul foreign investment regulations in the fields under its jurisdiction, such as broadcasting and telecommunications, The Yomiuri Shimbun has learned.

The ministry intends to set up an expert panel to launch discussions in June, according to sources. The move comes in response to a series of foreign investment violations by broadcasting company Tohokushinsha Film Corp. and Fuji Media Holdings, Inc., which has Fuji Television Network, Inc. and other firms under its umbrella. The ministry plans to reexamine such matters as the companies to be regulated and penalties with an eye on revising the Broadcast Law.

The law limits the percentage of voting rights held by foreign investors to lower than 20%, preventing them from taking control of news organizations. However, Tohokushinsha was granted a permit for a satellite broadcasting business in 2017 even though the voting rights percentage held by foreign investors had exceeded the threshold, constituting a violation of the law. Fuji Media also violated the law’s 20% provision between 2012 and 2014.

The expert panel is expected to start discussions with a review of companies subject to regulation. The panel is likely to examine if there are any other companies that should be regulated like broadcasters, given that telecommunications firms handling radio waves, which are public property, have diversified their businesses.

The ministry also intends to reconsider the specifics of foreign investment regulations. For example, the difference in foreign capital regulations between terrestrial and satellite broadcasting likely will become a point of contention. As terrestrial broadcasters have a large influence on society, the percentage of foreign investment in their parent companies is subject to regulations. On the other hand, for satellite broadcasting companies, the foreign capital percentage in their parent companies is not regulated. The panel is expected to look into whether such current regulations are reasonable.

A review of penalties is likely to be another focal point. The law stipulates that if a company violates foreign investment regulations, its license must be revoked. The certification for a Tohokushinsha subsidiary in the satellite broadcasting business was revoked. However, Fuji Media was not punished because the company had corrected the problem by the time it notified the ministry. The discrepancy has raised questions over the current regulations.

In addition, discussions are expected to be held on the introduction of a system to make periodic checks of the percentage of voting rights held by foreign investors and the establishment of a new department tasked with screenings for granting relevant certifications.

In April, the ministry set up a team to study overseas regulations on foreign investments ahead of launching its expert panel.