DeNA Slumps As CEO Takes Pay Cut on Fake Health News Scandal

(Bloomberg) -- Fake news isn’t just a challenge for U.S. tech companies.

Shares of DeNA Co. slumped as much as 8.4 percent in Tokyo after the game developer was embroiled in its own uproar. Chief Executive Officer Isao Moriyasu, whose company also publishes online content, took a pay cut after one of its websites posted articles with dubious health advice.

Moriyasu, who apologized for the posts, said the company will close nine websites that offer information about financial planning, child rearing and home repairs, among other topics. There was a problem in the “article creation process” at health-advice website WELQ, the CEO said in a statement Thursday. Among the site’s claims was that muscle cramps could be a result of having energy stolen by ghosts. There was a lack of editorial oversight, Moriyasu said, adding that he will slash his salary by 30 percent for six months to take responsibility.

The scandal, which became a hot topic and triggered a wave of criticism on Japanese social media, comes as more people take a closer look at the spread of false or inaccurate news in the U.S. and other countries. Facebook Inc. is taking steps to make sure that it doesn’t contribute to the spread of fake news, which was blamed for influencing, in part, the recent U.S. presidential election.

Shares of DeNA fell 7.8 percent to 3,245 yen as of 9:56 a.m. in Tokyo, the biggest decline since August. the stock has surged 71 percent this year and has a buy rating from 13 of the 22 analysts tracked by Bloomberg. The remaining nine have a hold rating while none recommend selling the shares.

MERY, which accounts for about 50 percent of the company’s website curation business revenue, remains open.

Curation is highly profitable for DeNA and closures could shave “several hundred million yen” from quarterly earnings, Keiichi Yoneshima, an analyst at Credit Suisse Group AG, wrote in a report.

--With assistance from Kurt Schussler To contact the reporters on this story: Yuji Nakamura in Tokyo at ynakamura56@bloomberg.net, Takashi Amano in Tokyo at tamano6@bloomberg.net. To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Reed Stevenson