Taiwan Optical Platform Co (TOP) yesterday urged the government to reform what it called outdated regulations banning investment in media outlets by political parties, the government and the military, saying the rules are used by people with malicious intent to sabotage business deals.
The Taichung-based multiple service operator issued the statement on Wednesday after its bid to buy Eastern Broadcasting Co (ETTV) was rejected by the National Communications Commission (NCC) on the grounds that the publicly listed firm failed to demonstrate that it has effective ways to prevent political parties, politicians or the government from purchasing its shares on the open market.
The commission said it doubted that Taiwan Optical Platform would have the financial capacity to invest in more facilities or content production after purchasing ETTV, while it has two cable companies from previous acquisitions, given the large loans it secured from banks.
The deal could cause public opinion to become less diverse, as Taiwan Optical Platform would own 13 channels, including two news channels, the commission said.
Taiwan Optical Platform said it was found in breach of media regulations because Pingtung County Councilor Song Li-hua (宋麗華) and Chinese New Hongmen Party, a registered political party, purchased its shares “out of malicious intent,” causing five cable companies the firm controls to be fined by the commission.
Because of the regulations, Taiwan Optical Platform was a victim and the one to pay the fine, it said.
The company cited a statement by NCC Legal Department Director Andy Hsieh (謝煥乾), who said that the regulations could be used to undermine the deal.
“It was the political party and the politician who broke the law by buying the shares, but Taiwan Optical Platform was punished, the company said. “The enforcement of the regulations preventing political parties, the government or the military from controlling media has created many problems, which have yet to be resolved.”
“The case highlights the urgency of rectifying this unreasonable situation,” it said.
The company said NCC concerns that it could monopolize the cable service market were unfounded.
It cited Article 24 of the Cable Television Act (有線廣播電視法), which limits the number of subscribers of a cable system operator to less than 33 percent of subscriptions nationwide.
Its subscribers only account for 9.38 percent of the total, including those who subscribe to the two cable systems it acquired last year, Taiwan Optical Platform said.
Even though it would have 13 channels if the deal was finalized, that is less than 12 percent of about 110 popular cable channels available, the company said, adding that it does not exceed the limit of 25 percent of the total channels stipulated in the act.
Taiwan Optical Platform said the Fair Trade Commission (FTC) approved its acquisition of ETTV on March 1 on the grounds that the deal could help raise money for ETTV, enhance its content production capacity and accelerate the convergence of media.
The FTC said the cable service market and channel service market would not undergo any significant change because of the deal.
The FTC apparently had a different view than the NCC, Taiwan Optical Platform said, adding that it does not know which opinion it should follow.
“We are a financially stable firm that has a steady cash flow, Taiwan Optical Platform said. “As of the fourth quarter last year, the firm’s debt ratio was only 33 percent. Our board of directors ruled last year to raised additional NT$3 billion [US$99.6 million] and gradually reduce our debt ratio.”
The company said that two experts retained by the NCC to assess the firm testified at the administrative hearing in March.
They said that Taiwan Optical Platform has a reasonable financial structure, according to the company.
The company vowed to seek compensation from Song and the party for deliberately causing the deal to fail, adding that it would not seek to purchase ETTV any longer.
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