
Fuji Media keeps real estate spinoff in play as activists circle
The Japanese entertainment group last month rejected a shareholder proposal from Dalton Investments calling for a different slate of directors as well as a spin-out of its lucrative real estate arm. But the company has yet to finalize its long-term strategy, Kenji Shimizu said in an interview Monday.
"The resulting scenario may be something along the lines of what shareholders propose, or we may pursue further growth instead,' Shimizu said. "Both scenarios are possible.'
The Japanese broadcaster — which is struggling to recover from a sexual harassment scandal — has been sparring with activist shareholders in an exchange that's become a gauge of corporate governance in Japan. Both Fuji Media's executives and Dalton are on a campaign to win shareholder support ahead of an annual general meeting on June 25.
For the near term, however, Fuji Media is reluctant to spin out the real estate arm. Operating profit in that division has grown four to five times since 2012, Shimizu said.
In contrast, Fuji Media's intellectual property assets — key to improving profitability in Fuji's core media and content segment — will require several years to monetize effectively, said Shimizu, who is now president of the group's television network. The real estate business essential as a source of investment income for the foreseeable future, he said.
Fuji Media has been struggling with declining advertising revenue alongside public condemnation of its handling of sexual misconduct allegations involving former celebrity Masahiro Nakai. Dalton has argued that Fuji should focus solely on growing its core media and content businesses.
Dalton's co-founder James Rosenwald has said that he and Fuji Media's largest shareholder, Aya Nomura, agree that spinning off the real estate unit could potentially double the conglomerate's corporate value.
Demands to split out the real estate operations will likely persist beyond the shareholder meeting later this month, Shimizu said. "Until our corporate value rises, we will continue to face such criticism,' he said.
Fuji Media is proposing 11 directors to a board that will keep Shimizu but replaces the rest of its current lineup. Dalton has proposed an alternative slate of 12 directors, including Yoshitaka Kitao, chairman and CEO of SBI Holdings.
"This board is the best we can offer now,' Shimizu said, but added that discussions are possible should any of Dalton's candidates be elected. "The task on hand is to discuss ways to enhance corporate value.'
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