EMG to expand digital TV operations in China

Eastern Multimedia Group (EMG, 東森集團), Taiwan's largest media group by revenue, will use a cash injection from US private equity firm the Carlyle Group to expand its digital television operations further into China, a senior executive said.

Unable to expand its subscriber base in its home market owing to regulatory caps, EMG sees developing digital TV content as a way to increase revenue at home and tap into the vast market in China, company chairman Gary Wang (王令麟) told Dow Jones Newswires.

"We brought Carlyle in for their six years of experience in managing cable TV, as well as for the money needed for further investment," Wang said.

In April, Carlyle agreed to pay about US$1.3 billion for stakes in EMG's Eastern Multimedia Co (東森媒體科技) and TV station Eastern Broadcasting Co (東森電視台).

With 1.06 million subscribers, Eastern Multimedia Co is Taiwan's second-largest cable TV operator, behind China Network Systems Co (中嘉).

Wang said his company planned to spend an estimated NT$3 billion (US$900 million) during the next five years to develop digital television content, which will help it boost revenue in the future.

He said a basic cable package in the US cost about US$25 a month, with a premium-content package costing US$75, whereas cable TV subscribers in Taiwan paid only NT$550 (US$16.72) a month.

"There's room for an increase [in revenue] if we add content," Wang said on Monday.

EMG's revenue last year was NT$59.9 billion, down from NT$60.28 billion in 2004.

Cable operator Eastern Multimedia Co's revenue last year was NT$9.48 billion, but Wang said this could double in the future through additional content on a digital platform.

As Eastern Multimedia Co's subscriber base is already nearing the regulatory cap of one-third of Taiwan's cable TV market, Wang said domestic revenue growth would come from migrating users to the digital platform, for which content is key.

Only 50,000, or 4.8 percent, of Eastern Multimedia Co's users now subscribe to its digital service.

The firm has three digital channels, but Wang said he hoped to have 10 channels by the end of the year.

With an eye on the China market, Wang said the group planned to co-produce TV dramas with China's national broadcaster, China Central Television (CCTV, 中央電視台), and would consider film production in the future.

Eastern Multimedia Co has a news-sharing agreement with CCTV, while the content of EMG's digital cartoon channels is designed in Taiwan and produced in China, with the aim of creating products that appeals to both markets.