Eastern Media International Corp (東森國際) yesterday said the company and Carlyle Group have agreed to sell their stakes in Eastern Broadcasting Co (EBC, 東森電視台) to DMG Entertainment for NT$18.3 billion (US$555.1 million) in total.
The transaction is the largest in the nation’s cable TV sector in two years. Washington-based private equity firm Carlyle is the biggest stakeholder of EBC, owning a 61 percent stake in the cable TV firm, which operates eight channels.
The deal, which was unveiled at the end of last month in DMG Entertainment chief executive officer Dan Mintz’ interview with the Los Angeles Times, riled legislators and media watchdogs due to reports that link DMG Entertainment with China.
Photo: CNA
The deal has to be approved by the Fair Trade Commission, the Investment Commission and the National Communications Commission (NCC).
NCC spokesperson Yu Hsiao-cheng (虞孝成) said that the Satellite Broadcasting Act (衛星廣播電視法) caps direct investment from overseas investors at 50 percent.
“The application would be rejected if he [Mintz] has bought shares from both Carlyle and Eastern Media, which would cause him to hold about 82 percent of EBC’s shares,” Yu said.
Photo: CNA
The Investment Commission said it would ask Mintz to disclose the source of his US$600 million investment to determine whether it involves Chinese funding. According to regulations, Chinese capital is not allowed to be invested in the nation’s media industry.
“DMG has close ties with China. We are not sure whether Mintz is really investing in Eastern Broadcasting as an individual or not,” commission Executive Secretary Emile Chang (張銘斌) said, adding that the commission would ensure that DMG would not have control over EBC.
Eastern Media expects to book NT$3.26 billion in gains next quarter via the sale of its 21.32 percent stake in EBC, if the deal is given the go-ahead by regulators.
“The offer price is satisfactory, as it is higher than similar deals taking place in Taiwan’s cable TV industry,” Eastern Media spokesperson Inna Jeng (鄭應娜) told a media briefing.
“The deal will help the company return to the black next year,” Jeng added.
Eastern Media lost NT$809 million in the first three quarters of this year because of a slump in the bulk carrier shipping business. Revenue totaled NT$8.39 billion from January through September, mostly from its TV shopping business, with the shipping business only accounting for 10 percent of the total.
In view of the volatile container shipping business, Eastern Media plans to phase out its shipping operations, with its container shipper contracts due to end in 2020, Jeng said.
The company is also seeking to sell a plot of land in New Taipei City, which has a market price of NT$7.3 billion, Jeng said.
The company expects to book at least NT$2.58 billion in profit from selling the property, she said.
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