Taiwan's Cabinet Removes Ban on Government Indirect Stake in Broadcasters

Taiwan plans to ease a ban on government ownership of media operators and broadcasters, paving the way for companies such as Taiwan Mobile Co. to acquire shares in cable television providers.

Taiwan’s Cabinet approved rule changes allowing the government to own up to 10 percent of media companies indirectly, Hsieh Huan-chien, deputy director of the National Communications Commission’s legal division, said by phone today.

Taiwan’s communications regulator in November approved the Tsai family’s NT$36.1 billion ($1.2 billion) purchase of cable TV operator Kbro from the Carlyle Group after an earlier acquisition bid through their phone company Taiwan Mobile failed because of ownership restrictions. The carrier “doesn’t rule out” pursuing the purchase of Kbro from its current owners, Rosie Yu, a spokeswoman for Taiwan Mobile, said today.

“We will have to wait for approval from the legislature before making any next move,” Yu said by telephone.

The Tsai family’s attempt to acquire the Kbro stake through their carrier had to be scrapped because Taipei City government is an indirect shareholder of Taiwan Mobile and regulations prevent government ownership of media operators. The cable operator’s current owners include a holding company set up by Taiwan Mobile chairman Richard Tsai and vice chairman Daniel Tsai, and the Carlyle Group.

“Indirect ownership will be allowed as long as government branches don’t have real control of targeted companies,” Hsieh said. Government direct holdings are still prohibited, he said.

The Tsai brothers as well as Victor Kung, a Taiwan Mobile director and representative of Kbro’s majority owner, would be excluded from board decisions on the purchase, Yu said.

Fubon Financial Holding Co., whose chairman is Daniel Tsai, is a major shareholder in Taipei-based Taiwan Mobile. Fubon Financial is 14.2 percent owned by the Taipei City government after it bought the municipality’s Taipei Bank in 2002.

To contact the reporters responsible for this story: Adela Lin at alin95@bloomberg.net; Tim Culpan in Taipei at tculpan1@bloomberg.net.

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net.

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