Trade watchdog approves Carlyle Group's cable bid

The Carlyle Group yesterday received a green light from the Fair Trade Commission to buy a majority stake in Eastern Multimedia Co (東森媒體科技) and 12 of its cable television affiliates.

"The deal is merely a transfer of ownership and will not significantly impact on competition in the nation's cable television market," the commission said in a statement released yesterday.

"Consequently, the commission will not block the deal," it said.

The Carlyle Group, manager of the US' largest buyout fund, applied for the share purchase under the name Carlyle Unicorn Holdings Ltd. It agreed to pay NT$47.6 billion (US$1.47 billion) for control of Eastern Multimedia and 12 of its cable television affiliates.

Eastern Multimedia is the largest cable television operator in the country. Along with the 12 affiliates, Eastern Multimedia has 1.01 million subscribers, or 22 percent of the local market, the statement said.

According to statistics of the Investment Commission under the Ministry of Economic Affairs, Eastern Multimedia had 1.05 million subscribers, or a 23.4 percent market share, as of the end of last year.

The second-largest cable TV provider is China Network Systems Co (中嘉網路) with 21.8 percent, followed by Taiwan Broadband Communications (台灣寬頻) with 13.6 percent.

The commission said the Carlyle Group's purchase would introduce funds and technology from a foreign specialized institution, which would help to enhance local cable TV operators' technological capabilities, in addition to the economic benefits.

The new overseas investor could also provide high-quality products and services to local consumers by developing value-added or diversified services, the statement read.

Gary Wang (王令麟), chairman of Eastern Media International Corp (東森國際), which holds an 18 percent stake in Eastern Multimedia, said at a shareholder meeting on Thursday that the listed parent company would gain NT$2 billion in profit after the share sale is completed.

Carlyle also planned to participate in raising capital at Eastern Home Shopping Network (東森購物), a money-making arm of Eastern Multimedia, with NT$17 per share, Wang said.

Carlyle's holdings in Eastern Home Shopping Network were expected to reach 25 percent in the near term, he said.

But Carlyle still needs to gain approval from the National Communications Commission (NCC) and the Investment Commission before officially taking over Eastern Multimedia.

The NCC rejected Carlyle's first application last Friday, citing insufficient documents on market share and operation plans. Carlyle also needs to ensure that the operator and 12 distributors don't control more than one-third of the market, as stipulated by law.

Carlyle might be able to obtain the approval of the Investment Commission, which will hold a meeting to review the bid this month, Bloomberg reported on Thursday, citing Emile Chang (張銘斌), deputy executive secretary of the Investment Commission.

"No committee members opposed the investment," Chang was quoted as saying.

In related news, the Fair Trade Commission yesterday also allowed Avenger International Ltd, an investment company registered in the Cayman Islands, to buy more than one-third of the shares in a cable television operator in Pingtung, according to a statement.

The operator has about 48,000 subscribers, or 1 percent of the total market, it said.