The parent of Fuji Television has slashed its earnings forecast after a scandal at the Japanese broadcaster prompted many firms to cancel adverts.

Fuji Media Holding says it will not charge for commercials that have been pulled. It made the decision at a board meeting on Thursday.

As a result, its group-wide revenue for the year ending in March is expected to drop 8 percent to about 548 billion yen, or 3.6 billion dollars.

Net profit is forecast to plunge 66 percent from the previous forecast to 9.8 billion yen or about 63 million dollars.

The scandal surfaced last month when a magazine reported that a TV personality Nakai Masahiro got into "trouble" with a woman and paid her a settlement.

It was alleged a Fuji TV employee played a role in introducing them.

Nakai is a former member of the now-disbanded pop idol group SMAP.

Fuji Television Network President Shimizu Kenji says that he takes seriously both the sharp fall in revenues and its impact on the parent firm's earnings.

The president also says the company will set up a panel to review management practices, as proposed by external board members.