Taiwan Optical Forum’s (TOF, 台灣數位光訊) proposed acquisition of Eastern TV network (ETTV, 東森電視) faced various questions at a public hearing organized by the National Communications Commission (NCC) yesterday.
The multiple service operator in October last year announced that it would spend NT$11.24 billion (US$358 million) to acquire 65 percent of the shares in ETTV that are owned by the Carlyle Group.
The remaining 35 percent is owned by Eastern Media International (東森國際) and its chairman Gary Wang (王令麟).
Dissatisfied with the deal that the Carlyle Group signed with TOF, Eastern Media International has filed a lawsuit against the Carlyle Group, as the former argued that it has the priority to buy back the shares in ETTV based on the terms of the contract.
Taiwan Media Watchdog director Lee Tze-wei (李子瑋) said that to prevent the monopolization of media companies, the commission should ask TOF to dissociate itself completely from ETTV’s news channel.
Lee suggested that TOF sign an agreement with the ETTV workers union to protect their right of employment.
As TOF also owns channels broadcasting content tailored to the needs of viewers in central Taiwan, he said the company must not replace local content with national content after they purchase the network to ensure diversity of content.
Campaign for Media Reform convener Eve Chiu (邱家宜) said TOF has won recognition for its local news coverage, but its proposed acquisition of ETTV is purely a business deal that enables TOF to become a major market player.
“What do viewers get from the acquisitions of media companies?” she asked.
Before the commission approves the deal, TOF should promise to carry non-commercial terrestrial television channels in its cable service, raise the percentage of self-produced programs and allow viewers to choose the channels they want to watch by implementing a tiered pricing plan, she added.
TOF said it does not receive any operational funds from China, and the proposed acquisition would not cause it to exceed the caps set for the number of cable service subscribers and the number cable channels a cable operator can legally own and control.
Some people cast doubt on TOF’s ability to pay back the loans to banks and sustain itself.
They asked how the company was able to secure a loan exceeding NT$10 billion when TOF and ETTV have a combined capital of less than NT$3 billion.
Taiho law firm attorney Chen Yen-ren (陳彥任) said TOF signed a five-year loan for NT$13.5 billion to purchase ETTV, adding that it is supposed to pay back NT$3 billion per year, including the principal and interest.
Having reviewed the company’s financial report in 2015, Chen said TOF would be NT$1.8 billion short in its annual payment to banks.
The Carlyle Group said Wang has the right of first offer, but does not have the right of first refusal.
Eastern Media International has neither the right of first offer nor the right of first refusal.
According to the group’s representative, the difference between the right of first refusal and the right of first offer is that the former requires the seller of the shares to inform in advance the other party in the contract about the number of shares it intends to sell and the conditions for sale, and the seller can only proceed to sell the shares it owns if the party having the right of first refusal turns down the offer.
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