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Investing.com -- Fuji Media Holdings Inc. has experienced a decline in its shares and a widening spread on its bonds as the company grapples with the ongoing fallout of a sexual harassment scandal.
The Japanese television broadcaster has been negatively impacted following allegations that Masahiro Nakai, a former J-pop star and TV host for the company, sexually harassed a woman.
The company’s stock fell by as much as 5.3% on Friday, following the company’s decision on Thursday to reduce its full-year operating income forecast from ¥35.30 billion ($229 million) to ¥18 billion ($117 million). This decision was made in response to several companies pulling their advertisements from the broadcaster. Fuji Media also stated it will not seek compensation for the canceled ads.
The scandal has led to significant changes in the company’s leadership, with the president of Fuji Television Network Inc. and the chairman of its parent company both resigning due to the handling of the situation.
In the five trading days preceding Friday’s drop, the company’s stock had increased by around 25%. This was due to some investors betting on improvements in corporate governance.
The company’s bonds have also been affected. The additional premium that investors require to hold Fuji Media’s debt over government bonds has been increasing in recent weeks.
The spread on Fuji Media bonds due in December 2028 has more than tripled this year, reaching a record of about 124 basis points as of Thursday, according to data compiled by Bloomberg. This is a significant increase from the roughly 35 basis points where spreads had generally hovered since the bond’s issuance in December 2023 until the end of last year.
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