Sun, Mar 04, 2018 - Page 3 News List

Reporter’s Notebook: Formosa TV rumblings reflect industry shift

By Shelley Shan  /  Staff reporter

Arbitration led by the National Communications Commission (NCC) on Feb. 13 succeeded in averting a crisis before the Lunar New Year holiday when Formosa TV agreed to give Taiwan Broadband Communications (TBC) a second temporary authorization to broadcast the Formosa News channel.

Industry experts warned that the dispute was only one of the many challenges facing the broadcast media regulator in an era of digital convergence.

Understanding the “ecosystem” of the nation’s cable service market clarifies the dispute and its source.

Most of the nation’s cable systems are controlled by TBC and four other multiple-system operators: Kbro, TWM Broadband, China Networks Systems and Taiwan Optical Platform.

Kbro is owned by Dafu Media, which was founded by Fubon Group chairman Daniel Tsai (蔡明忠). Tsai is also chairman of Taiwan Mobile and TWM Broadband.

TBC is owned by Asia-Pacific Telecom chairman Lu Fang-ming (呂芳銘).

Channel operators typically must pay fees to the cable system operators to be included in their cable channel lineups. The cable systems must pay channels to secure authorization to broadcast their content.

Channels defined by the media regulations as “must-carry” channels are the exception to this rule, with neither party paying a fee.

The amount to be paid by a cable operator or channel is settled through negotiations between the two parties. Channels retain agents who negotiate with the cable systems on their behalf.

Kbro and ERA Communications used to be the two giants of the channel agent business. Kbro and TWM Broadband jointly represented 29 channels, while ERA represented 27 channels.

TBC entrusted ERA chairman Lien Tai-sheng (練台生) with handling its negotiations with channels seeking to be added to its cable programming.

Because the multiple-system operators are also channel agents, negotiations in the past would focus on making sure that the channels that they represented were included in their competitors’ channel lineups. They would work out various deals among themselves.

For example, an agent might offer a cable system operator a discount or waiver on a content authorization fee if the operator would allow all channels represented by the agent to be broadcast on its system.

In the case of Formosa TV, the network was exempt from paying a channel lineup fee to TBC. In return, TBC did not have to pay a content authorization fee to Formosa TV.

However, this arrangement was disrupted following two critical changes made by Kbro and TBC at the end of last year.

Kbro announced that starting this year, it would cease acting as an agent for channel operators, and TBC ended its partnership with Lien, taking back its right to negotiate with channel operators.

The two multiple-system operators said that each channel could negotiate the authorization fee with them directly.

Most channel operators found new agents to represent them, but Formosa TV chose to handle its own negotiations with TBC. However, the negotiations between the network and TBC became gridlocked as the two parties failed to agree on authorization terms.

Formosa TV demanded that TBC carry the network’s other two channels — FTV One and FTV Taiwan — as well as Formosa News and that it pay for the content aired on the channels. TBC rejected both demands.

The network would have already been removed from TBC’s programming if it were not for two interventions by the NCC.

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