Watchdog delays Carlyle Group's bid for Eastern

The Carlyle Group's NT$47.6 billion (US$1.5 billion) bid to control Taiwan's Eastern Multimedia Co (東森媒體科技) and cable television affiliates failed to win approval at the first attempt as regulators sought more proof competition will be safeguarded.

The bidding group needs to provide more documents on market share and operation plans, said Huang Ching-yi (黃金益), responsible for scrutiny of the bid at the National Communications Commission (NCC).

A call to Carlyle's Hong Kong-based spokeswoman Dorothy Lee wasn't answered.

The commission wants further information to ensure Eastern Multimedia's 12 cable-television channels and 13 distributors don't control more than one-third of the market, as limited by law, Huang said yesterday.

Eastern Multimedia had almost a quarter of the nation's 4.5 million subscribers at the end of last year. Adding the cable channels, the group's market share is even higher, he added.

Eastern Multimedia hasn't been contacted by the government yet and will provide documents if asked, Eastern Multimedia spokesman Johnny Sand said yesterday.

"I don't think the government is trying to block the deal," said Michael On, managing director at Beyond Asset Management Co in Taipei.

"The commission is simply trying to avoid [having] any company dominating the domestic market," he said.

Contracts covering the stake sales were signed on April 24, Sand said. Details won't be announced until after approval by the Ministry of Economic Affairs' Investment Commission, he said. The deal needs to be approved by the NCC before being screened by the Investment Commission. The value of NT$47.6 billion was confirmed by Huang.

Eastern Multimedia would be the second cable operator to be sold in Taiwan in the past six months, as overseas firms bet they can boost profits by introducing new technology and services.

Macquarie Media Group, Australia's biggest commercial radio operator, agreed in December to buy Taiwan Broadband Communications (台灣寬頻) from Carlyle for A$1.19 billion (US$890 million), giving it a 12 percent market share. The US buyout firm bought Taiwan Broadband in 1999 for about US$200 million.

Taiwan has set a ceiling of 60 percent for combined direct and indirect holdings by foreign funds in a cable TV operator, Huang said. Sydney-based Macquarie Media avoided the ceiling in its acquisition by arranging for a local investor to hold preferred stock in Taiwan Broadband.

Eastern Multimedia had 1.05 million subscribers, or a 23.4 percent market share, as of Dec. 31 last year, followed by China Network Systems Co (中嘉網路) with 21.8 percent and Taiwan Broadband with 13.6 percent, Huang said in March.