(Bloomberg) — Fuji Media Holdings Inc. shares gained after the embattled Japanese broadcaster said it will overhaul management and improve its capital allocation.
Most Read from Bloomberg
Fuji Media shares jumped as much as 7.4% on Friday in Tokyo, the biggest intraday gain in more than a month. The move incorporates the impact of trading ex-dividend.
The company said in a briefing Thursday that its powerful 87-year-old former chairman and executive management adviser Hisashi Hieda was resigning from the board. It will also review its asset holdings, including strategic equity, and improve capital allocation. Fuji Media has extensive real estate holdings, as well as cross-shareholdings.
Reaction to the news was more muted in the debt market. The spread in Fuji Media’s corporate bonds maturing in 2028 was about 119 basis points as of Thursday, almost unchanged from the previous day. The level remains significantly higher than before the company became engulfed in a sexual harassment scandal in December.
The results of an independent inquiry into the scandal are due by the end of this month.
“The stock market liked that the company is taking actions without waiting for the results of the inquiry. It is betting Fuji will improve efficiency through business restructuring,” said Kazuhiro Sasaki, head of research at Phillip Securities Japan Ltd. “On the other hand, the credit spread hasn’t tightened yet because sponsors haven’t come back,” he added.
The contrasting market reactions reflect indicate that debt investors still see governance issues remaining, “which wouldn’t change the judgment of credit risk,” said Taketoshi Tsuchiya, chief executive officer of Tsuchiya Asset Management Co.
Fuji Media has been under pressure to overhaul its management after its handling of the a sexual harassment case led sponsors to pull out ads. Rising Sun Management, adviser to Nippon Active Value Fund, called for Hieda’s resignation while Rheos Capital Works, which has become a large shareholder earlier this year, called for the company to bring in younger talent to the board.
Fuji Media also said it will slash the size of its board to 11 members from 17, and make the majority of members outside directors.
–With assistance from Yui Hasebe.
(Adds impact in the debt market)
