Commission undecided on China Networks issue

The National Communications Commission (NCC) has yet to decide if it will issue an official statement to oppose the acquisition of the China Networks Systems Co by foreign investors, a commission member said yesterday.

Liu Zong-de (劉宗德), one of the commission's vice chairmen, told the Taipei Times that the commission had not made any arrangements to discuss the issue in any meeting soon.

Liu's statement came in response to a report published in the Chinese-language China Times yesterday, saying the commission was considering opposing the acquisition.

The report said sources had indicated that the commission was planning to evaluate China Networks' case from several angles, namely whether ownership by overseas investors would affect the quality and the content of the TV programs and whether it would constitute a violation of the Cable Television Law (有線電視法) on foreign shareholding.

According to the report, the commission would closely monitor the development of the acquisition, as the deal would give overseas investors access to more than 50 percent of the nation's households that subscribe to the cable TV service.

The acquisition deal has garnered much media attention lately in the wake of Australian conglomerate Macquarie Media Group's acquisition of Taiwan Broadband last year and the US-based Carlyle Group's purchase of a majority stake in Eastern Multimedia Group two months ago.

A report in the Chinese-language Commercial News on Friday also indicated that different groups were working together to acquire a joint stake in China Networks, including the coalition between PCCW and NewBridge Capital, Star TV and Macquarie Group, and Carlyle Group, Kohlberg, Kravis and Roberts & Co (KKR) and the Seoul-based MBK Partners.

Macquarie's and Carlyle's past investments, however, went unopposed, with the commission merely showing concern about potential consequences. Both investments were approved by the Investment Commission.

According to the Cable Television Law, direct investment by overseas investors in any local TV network may not exceed 20 percent. Additionally, combined direct and indirect investment by foreign investors may not exceed 60 percent of a company's shares.

Weng Hsiu-chi (翁秀琪), a journalism professor at National Chengchi University, was quoted in the China Times story as saying that allowing overseas investors to acquire China Networks would have a profound impact on the nation's cable TV service and the administration could not afford to ignore the consequences.

She noted that these investors were mainly driven by profits and would focus more on ratings rather than program quality.

Besides limiting the percentage of stockholding by overseas investors, the government should set a quota to protect locally produced programs, she said.