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On March 12, the government announced it was planning to revoke a license it gave to The Cinema 4K, a unit of satellite broadcaster Tohokushinsha Film Corp. that features many foreign films. The reason cited by the government was its discovery that Tohokushinsha’s foreign investment ratio was above the maximum 20% allowed by the Broadcast Act.

The decision came after a number of senior government officials connected to the communications ministry, which enforces the act, were punished for violating the ethics code for bureaucrats, having been wined and dined by Prime Minister Yoshihide Suga’s son Seigo, who works for Tohokushinsha.

What is the Broadcast Act and what does it cover?

The act was approved by the Diet in 1950 and has been through a number of revisions since then to reflect changing communication technologies. But basically, it lays down the rules for broadcast content over television, including traditional terrestrial-based television and satellite-based television broadcasters, as well as cable TV broadcasters.

To receive a license under the law, applicants must agree not to broadcast content that harms public order, and they must take a politically neutral position, which is one reason strongly partisan political programming of the kind seen in other countries isn’t found on Japanese television. When applying for a broadcast license, the broadcaster must explain to the ministry what general standards they will use for their planned broadcasts that will satisfy those requirements.

In terms of specific issues such as advertising, a separate industry group, the Japan Commercial Broadcasters Association, has a set of guidelines used by most commercial broadcasters. However, the Broadcast Act prohibits NHK, as the national public broadcaster, from broadcasting advertisements for commercial purposes.

Providers of internet content are generally not regulated by the broadcast law, but rather under separate laws governing the use of cable telecommunications and radio waves.

What is the rationale for the law’s limitations on foreign investment?

The Ministry of Internal Affairs and Communications calls public airwaves used for broadcasting a national property. Given the important role broadcasters play in disseminating speech and information about politics, society and culture, the public airwaves are indispensable for people’s lives, especially in times of disaster. Therefore, control by a foreign individual or entity of this national property has been limited on the basis of national security reasons.

The Broadcasting Act states that the foreign investment ratio must be capped at 20%, and it covers foreign individuals, governments and corporations.

Prime Minister Yoshihide Suga bows in apology during a House of Representatives Budget Committee session in Tokyo on Feb. 22 over a scandal in which senior communications ministry officials were treated to expensive dinners by Suga's eldest son. Seigo Suga works for Tohokushinsha Film Corp., a satellite broadcasting company that receives licenses from the ministry. | KYODO
Prime Minister Yoshihide Suga bows in apology during a House of Representatives Budget Committee session in Tokyo on Feb. 22 over a scandal in which senior communications ministry officials were treated to expensive dinners by Suga’s eldest son. Seigo Suga works for Tohokushinsha Film Corp., a satellite broadcasting company that receives licenses from the ministry. | KYODO

How does Japan’s broadcast law compare to broadcast regulation efforts elsewhere?

In the U.S., foreign ownership of U.S.-based wireless telecommunications and broadcast entities is capped at 25%, unless the Federation Communications Commission approves a higher percentage. In recent years, there have been a few cases where it has approved 100% foreign ownership. But approvals of requests to go beyond the 25% limit come only after the request has been vetted by other government agencies and a committee on foreign investment under the U.S. Treasury Department.

Worried about America’s key telecom assets being owned by those in nations such as China or Russia, the U.S. government has a group, dubbed “Team Telecom,” of personnel from the departments of Defense, Justice and Homeland Security. Its job is to monitor the ownership of telecom assets in order to maintain the security of the nation’s telecom infrastructure and prevent it from being owned by foreign powers hostile to the U.S.

Last year, Team Telecom became a formal legal process for reviewing applications for telecom licenses and deals, assisting the FCC in reviewing national security and law enforcement concerns that might be raised by foreign participation in the sector.

In Europe, only five members of the European Union have some form of restriction on foreign ownership of media organizations. In France, foreign firms may own up to 20% of a daily newspaper, a terrestrial radio station or TV company, but only for those that broadcast in the French language. In Spain, as well in Japan, there are no restrictions on foreign ownership for print media, but foreign ownership in the radio and television sectors is capped at 25%.

How did Tohokushinsha get a license if it violated the 20% cap?

When Tohokushinsha Film Corp. applied to the communications ministry in October 2016 for a license to broadcast on The Cinema 4K, it said that its ratio of foreign capital was under 20%. The ministry granted a license in January 2017.

But in August 2017, the company verbally notified the ministry that it may have violated the foreign investment ratio rule, and in fact the ratio of such investment was 20.75%. The error was attributed to a mathematical error, with Tohokushinsha saying it had not counted shares held by foreign entities that were under 1% of the total.

Tohokushinsha President Shinya Nakajima told the Diet on March 15 who at the ministry was notified of the error. But the ministry said the official in question doesn’t recall such a meeting. No documents establishing that the meeting took place have surfaced publicly yet.

What’s has the fallout been for Tohokushinsha and the ministry?

The ministry has announced that The Cinema 4K’s license will be revoked due to the Broadcast Act violation, a rare move. Exactly when the license will be revoked is unclear, but the company will have to notify its roughly 700 subscribers that it will be suspending its service. However, Tohokushisha has other channels and broadcasting services, and those will continue to operate.

For the ministry, questions over the Broadcast Act violation and what the ministry knew about it are just part of the larger scandal related to the wining and dining by Suga’s son and other executives at Tohokushinsha, as well as a separate hospitality scandal that has come to light since then involving ministry officials, including the communications minister, and top Nippon Telegraph and Telephone Corp. officials.

These scandals have raised further questions about whether firms overseen by the ministry were seeking favors related to some aspect of the Broadcast Act or other laws governing satellite broadcasting and telecommunications. The government has appointed a third-party panel to conduct an investigation into the scandals.

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