What the government should do with its controlling shares of TTV (
The drawback with privatization is that the TV stations will need to produce sensational programming to increase viewership because of commercial competition. But nationalizing the stations also presents difficulties, such as how to raise funds to buy the privately-held shares of the companies, how to make public television cost-effective in order to limit the financial burden on the government and how to set up checks on the influence of political power from permeating television media.
However, if legal techniques are used well, the ideal of nationalization is not an impossible dream. Moreover, under the current legal structure, a readily available solution does exist: the "public-interest trust" system stipulated in Chapter Eight of the Trust Law (
Public-interest trusts are new to Taiwan. The Trust Law, which was promulgated in 1996, was modeled after the regulation systems in the UK, the US and Japan. There are two types of public-interest trusts -- "self-declared trusts" and "contract trusts."
In the former, a legal entity declares itself the grantor and trustee on behalf of the public interest . The TV station in question will then have to buy the shares of private shareholders unwilling to join the public-interest trust. Then the board of directors declare themselves to be trustees of a public-interest trust. The station itself and "members of the public invited to participate," or invest, will be the grantors.
The law, however, does not further define "the public." In practice, the trustees on the board would probably be well-respected and accomplished members of society. The political make-up of the trustees would reflect the standings of the political parties at the time of their appointment. The rights and responsibilities associated with this public trust would be set out in accordance with the board's declaration. For example, if the declaration requires program hosts to take a neutral stance, then the station will have a responsibility to make sure that program hosts are neutral.
In the case of contract trusts, the grantor gives property in a public-interest trust to a trustee by means of a contract to engage in public-interest activity. The government directly turns over its stake in the TV station to a trustee compatible with regulations in the Trust Law. The trustee then appoints representatives to the station's board of directors. The trustee will use his representa-tive's controlling power in board meetings to indirectly make the nationalized company perform its duty as a public-interest trust, such as ensuring the promotion of culture, freedom of the press and the duty of the media to be a neutral observer. The precise nature of these rights and responsibilities would be clearly stated in the trust contract.
If this sort of trust is adopted, the trustee must fit the requirements of the Trust Law and then the Ministry of Finance must grant permission for that trust to operate a media business.
A public-interest trust is a viable option because it can include both public and private ownership. On the one hand, it realizes the ideal of nationalization, and on the other hand it still allows the TV stations to use advertising appropriately to generate revenue. The only condition is that all profits are used to produce new programs for the benefit of viewers. Because of this profit-return mechanism, public trusts encourage better program quality.
To safeguard the public interest, the public-trust system has two types of supervisory systems -- an internal "trust supervisor" and an external "public interest affairs organ." No matter which method is used to set up a public-interest trust, the cross-party "media nationalization supervisory group" being drawn up can serve the role of "trust supervi-sor." In future, all TV stations held in public-interest trusts will need to accept the views of the supervisory group, according to the stipulations of the Trust Law. The group may also inspect the status of the trust's assets at any time.
Another advantage of public trusts is that they are exempt from tax. For a self-declared trust, exemptions are made according to the regulations covering public-interest organizations in the income-tax law. A contract trust can also be freed from income taxes if it meets the guidelines of the income-tax law. This should be helpful for the terrestrial stations, which are now facing hard times.
Although there are very few examples of public-interest trusts in Taiwan, they have already been widely used in the US and UK to gather capital and promote the public interest. Examples include the Community Foundation in the US and educational, religious, animal protection, environmental protection and even political public trusts in both countries. A well-known example is the Shakespeare Memorial Trust, which is dedicated to performing the bard's plays and reviving Eng-land's classical drama.
The chief culprit behind Taiwan's third-rate TV culture is interference from party and government interests. An accomplice to this is interference from the economic power of business conglomerates. Mainstream popular opinion approves of the withdrawal of parties and government interests from terrestrial TV stations. But how can the public be willing to see the same stations degenerate into profit-making tools for conglomerates?
Public trusts will allow the public interest and an appropriate degree of commercial interest to coexist and even complement each other, thereby lifting the standards of TV programming in Taiwan and promoting a viable direction for overall cultural development.
Chen Jung-lung is director of the Graduate Institute of Law at Fu Jen Catholic University. Hsu Chung-hsin is an assistant professor at the financial and economic law department of the university.
Translated by Ethan Harkness
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