Several Democratic Progressive Party (DPP) lawmakers have asked government regulators to investigate whether the recent purchase of the country’s second-largest cable TV provider involved Chinese capital — illegal under the regulations.
Lawmakers said the purchase of China Network Systems (CNS, 中嘉網路) by Want Want Group (旺旺集團), a conglomerate that makes its profits in China, should be screened very carefully by the National Communications Commission (NCC), the Investment Commission and national security agencies.
“We have deep concerns on where this money is coming from,” DPP Legislator Pan Men-an (潘孟安) said. “Cable TV providers aren’t on the list of industries that can accept investment from China.”
At the Transportation Committee meeting at the legislature yesterday, the DPP lawmakers proposed that the NCC should postpone the sale to gather public opinion.
Under their proposal, which has yet to be approved by Chinese Nationalist Party (KMT) lawmakers, the NCC would have to hold public consultations over the sale of the company.
A representative of Want Want Group confirmed on Tuesday that an investment group it heads had agreed to purchase CNS for NT$71.5 billion (US$2.3 billion). Other members of the investment group reportedly include former Cathay Financial Holding Co (國泰金控) vice chairman Tsai Chen-yu (蔡鎮宇), ETTV Group (東森集團) and three smaller independent cable providers.
Under the terms of the deal, CNS would be controlled by a new company called Want Want Cable (旺旺寬頻), which was established last month. However, it was not immediately clear how Want Want Group, which lists its shares in Hong Kong and owns 51 percent of the new company, would be financing the purchase.
A special assistant to Want Want’s president told Bloomberg that the group signed the agreement on Monday, but declined to provide financial details. The parties to the deal have not yet spoken publicly on the issue.
Calls for an investigation by DPP lawmakers represent strong concerns that Want Want Group, which reportedly has close ties with the Chinese government, could be leveraging capital raised through food and beverage sales in the Chinese market to influence Taiwan’s domestic media. The group reportedly made about 93 percent of its income in China last year.
Group chairman Tsai Eng-meng (蔡衍明) also runs the China Times Group (中時集團), which includes China Television Co, CTI News and the Chinese-language Commercial Times and China Times newspapers, with his son Tsai Shao-chung (蔡紹中) acting as general manager.
The senior Tsai acquired the financially troubled media syndicate in November 2008.
Control over CNS, which has about 1.07 million subscribers and reaches 20 percent of households nationwide, would give Tsai Eng-meng more control of the media, DPP lawmakers said. It could have “dangerous implications” for free speech, they said.
DPP Legislator Kuan Bi-ling (管碧玲) said the purchase would mean that Want Want Group would “essentially control one third of the Taiwan’s [media coverage]” and that this issue alone gave her “deep misgivings.”
“Whoever controls the means, controls the content,” Pan said.
“There are public misgivings not only about how Want Want Group is financed, but also on whether this will give them a monopoly in this sector. That is why we want an investigation,” Pan said.
Speaking on the issue for the first time yesterday, National Communications Commission Chairperson Su Herng (蘇蘅) pledged that the NCC would take a close look at the purchase, the details of which it had yet to receive.
The purchase of CNS by Want Want Group needs to be reviewed because of concerns over fair competition and the monopolization of the media market, Su said.
“We are very much focused on whether the market power [of Want Want Group could lead] to other, broader effects,” she said. “This case will only be approved if it is found to be fair and will not result in an abuse of Want Want Group’s market position.”
Noting that the NCC is currently reviewing the purchase of Kbro Cable TV (凱擘有線電視) by a separate company established by Fubon Financial Holding Co chairman Daniel Tsai (蔡明忠) and his brother, Taiwan Mobile Co chairman Richard Tsai (蔡明興) — no relation to Tsai Eng-meng — which takes into account concerns that the merger would lead to a market monopoly and the impact of this on fair competition and the interests of consumerts, Su said the same principles would be applied to the review of the CNS case.
In the future, NCC reviews would take into consideration financial structure, sources of funding, market share, the numbers of TV channels and concerns related to media convergence, she said.
ADDITIONAL REPORTING BY STAFF WRITER
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