Sat, Jan 08, 2011 - Page 3 News List

FEATURE: Amendment seeks to end cable TV monopoly

By Shelley Shan  /  Staff Reporter

Lee added there is another structural factor explaining why the penetration rate was so low.

“Consumers in Taiwan are already used to the business model where you can watch 100 or more channels on cable by paying a fixed rate of about NT$500 per month, and that is the biggest obstacle [to raising the penetration rate],” he said, adding that more empirical evidence is needed before concluding that the private equity funds are indeed at fault.

Former Financial Supervisory Commission chairman Shih Jun-ji (施俊吉) has questioned whether Dafu can really live up to its promises to the NCC. According to Shih, Dafu secured a NT$54 billion (US$1.84 billion) loan from the banks. A bulk of the monthly fees that subscribers pay would be used to pay back the loan and the interest, he said, adding that the remaining sum, along with the fees collected from the advertisers and channel operators, is needed to cover content authorization fees as well as the network maintenance and personnel costs. Not much is left to upgrade facilities or buy high-quality programs, he said. Neither can the channel operators benefit from the deal, he added.

“The channels are not likely to obtain more content authorization fees from it [Dafu Media], which the channels needs to produce quality programming,” he said. “And trying to retain subscribers, it [Dafu] will continue all the unfair practices that allow them to control the media platform.”

Despite these concerns, some channel operators remain upbeat about the future of the cable service market.

Cable operators need programs and channel operators need access to reach the audience, said May Chen (陳依玫), chairwoman of the self-disciplinary committee of the Satellite Broadcast Television Association (STBA).

She said some of the MSOs had access to more than 1 million subscribers, which they use as bargaining chips to ask the channels to cut or give discounts on content authorization fees. Channels wanting to reach a bigger audiences have little choice but to accept that arrangement, which explains shrinking content-generated revenues, she said.

Axing content authorization fees will only force channels to produce programs with good TV ratings, which in turn help boost advertising revenues. However, those are not necessarily the high-quality programs people expect, she said.

“The need to increase ratings is behind nearly all the abnormal media practices you see nowadays, which is why we need to have a self--disciplinary committee,” Chen said. “Advertising revenue now accounts for 80 to 90 percent of revenues in TV stations. If we could depend less on advertising revenue and be compensated more from content authorization fees, maybe there would be a way to end this vicious circle.”

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