Carlyle Group LP is preparing to sell its controlling stake in Eastern Broadcasting Co., Taiwan’s biggest broadcaster, and is seeking as much as $700 million, people familiar with the matter said.
The U.S. private equity firm has contacted investment banks about finding buyers for its 67 percent stake in the cable TV company, said the people, who asked not to be identified as the talks are confidential. The sale may draw interest from local Taiwanese media groups, two of the people said.
Eastern Media International Corp., which owns 21 percent of Eastern Broadcasting, is interested in acquiring Carlyle’s stake, one person familiar with the matter said. It has an agreement with Carlyle giving it the right to make the first offer, according to the people. Eastern Media, which rose as much as 5.7 percent today in Taipei trading, closed at the highest level in two and a half years.
“A lot of investors could be interested in this,” said Vivek Couto, the Hong Kong-based executive director of industry consulting firm Media Partners Asia Ltd. “It’s a good play in Taiwan that you can grow.”
Carlyle is seeking to exit the last of its cable TV operations on the island as broadcasters grapple with different ways to distribute content to consumers, who increasingly watch programs on smartphones and tablets. MBK Partners Ltd. and Macquarie Group Ltd. moved to sell similar businesses this year through initial public offerings.
Carlyle may seek a valuation of 15 to 20 times Eastern Broadcasting’s earnings before interest, taxes, depreciation and amortization, one person said. The stake may fetch between $400 million and $700 million, the people said.
The broadcaster would give an acquirer access to a large local advertising market as well as programming that is exported to China, Media Partners’s Couto said. Taiwanese media assets are typically sold for eight to 12 times Ebitda, he said.
Eastern Broadcasting owns eight domestic channels in Taiwan, including two news channels, that command a 21.8 percent share of viewership on the island, according to the company.
Taiwan’s television industry generated NT$51 billion ($1.7 billion) in advertising and subscription revenue last year, according to Media Partners Asia. Advertising revenue at pay-TV channels will grow at a compound annual rate of 3.5 percent from 2012 to 2017, the consulting firm forecasts.
Carlyle hasn’t disclosed its total investment in Eastern Broadcasting. Spokesmen for Carlyle, Eastern Media and Eastern Broadcasting declined to comment.
The private equity firm built a majority holding in Eastern Broadcasting, later replacing the company’s top management, after first paying $1.5 billion to acquire parent Eastern Multimedia Co. in 2006. Its acquisition of Eastern Multimedia was the largest-ever buyout deal in Asia excluding Japan at the time.
Carlyle first invested in Taiwan’s cable TV industry in 1999. It previously held stakes in Taiwan Broadband Communications Co., which it sold in 2006, and Kbro Co., which it sold in 2010.
Hong Kong’s Next Media Ltd. agreed in April to sell its money-losing Taiwan TV unit for NT$1.4 billion ($47 million). EQT Partners AB acquired Taiwan’s Gala TV Corp. in 2011.
MBK Partners is considering a Singapore initial public offering for China Network Systems Co., after failing to sell the Taiwanese operator to Want Want China Holdings Ltd. Chairman Tsai Eng Meng for $2.4 billion including debt, people familiar with the matter said in July.
Asian Pay Television Trust, owner of Taiwan’s third-largest cable television operator, listed in Singapore in May and is down 21 percent from its IPO price.
Eastern Media shares rose 3.7 percent to end Taipei trading at NT$12.70, the highest since May 2011.