The National Communications Commission (NCC) yesterday unanimously approved Dafu Media’s purchase of an 80 percent stake in cable TV stations owned by cable TV operator Kbro Co after Dafu made some specific commitments.
NCC spokesperson Chen Jeng-chang (陳正倉) said Taiwan Mobile Co deputy chairman Daniel Tsai (蔡明忠), who represented Dafu, and Gregory Zeluck of Carlyle Group, who represented Kbro, were present at the commission meeting.
“Dafu has made specific and positive promises to accelerate the nation’s progress toward digital convergence and protecting consumers’ interests,” Chen said. “For that reason, the commission -approved the transaction following relevant regulations.”
Dafu was formed by Tsai and his brother, Richard Tsai (蔡明興), who is also chairman of Taiwan Mobile Co.
The NCC said Dafu was not an affiliate of Taiwan Mobile Co and that Daniel Tsai was one of the major shareholders in Dafu. Chen said Dafu made 15 specific commitments, including a plan to invest NT$5.2 billion (US$173 million) in infrastructure to facilitate digital cable TV provision. It will also spend NT$1.2 billion to produce high--definition content and establish a drama channel, a children’s channel and a variety show channel.
The transaction enables Dafu to control 12 cable TV stations owned by Kbro, -accounting for about 22 percent of the market.
Dafu also agreed to lower the monthly service fees for four of Kbro’s cable TV systems that charge more than the national average
Meanwhile, Dafu agreed to not invest in any analog TV channel within a year of acquiring the license or control any analog TV channel within three years of receiving its license from the NCC. It will also be barred from selling channels to any party while its license is valid.
Dafu said it had no intention of running finance or news channels or expanding its home shopping channels.
Chen said Dafu secured approval because it had actively responded to government policies on digital cable TV by presenting the NCC with a detailed plan on how it aimed to raise the percentage of digital services in each area.
At present, about 10 percent of Kbro’s subscribers use the digital service. Dafu said it aimed to raise the ratio to 16 percent next year and 23 percent in 2012. It said that by 2015, digital TV would reach 50 percent of its subscribers.
Chen said Dafu would be required to include some of the promises in its operational plan.
The NCC consulted experts and held a public hearing before it issued its final ruling. During those meetings with experts and media professionals, some questioned whether Dafu still had the financial capacity to provide digital television services after it spent so much on the purchase.
Chen said Dafu had NT$13.6 billion in capital, adding that it would seek a NT$50 billion bank loan. About 60 percent of revenues will come from subscription fees, it said.
“After reviewing the information [provided by Dafu], we found that [funding] was not an issue,” Chen said.
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