Taiwan regulator nixes Carlyle's EBC exit

The NCC said in a statement that the deal is not in the public interest because it could dilute competition in the media industry. It noted that Taiwan Optical already has a 9.89% share of the domestic cable TV market and the acquisition of EBC would give it control of 13 satellite channels, including two national news channels. This would make the company Taiwan’s largest cable TV and radio player.

The regulator also expressed concerns about Taiwan Optical’s track record – it has previously been accused of willfully undermining competition – and the company’s ability to support the deal based on “overly optimistic” financial forecasts. The NCC’s decision will be passed to the Investment Commission under the Ministry of Economic Affairs (MoEC) for consideration.

Taiwan Optical announced last October that it would pay NT$11.12 billion ($351 million) for Carlyle’s entire stake in EBC plus additional shares from EBC employees, giving it an overall interest of 65%. This came shortly after US-based DMG Entertainment abandoned its NT$18.3 billion bid for a more than 80% interest in EBC. That deal faced scrutiny due to fears that DMG had mainland Chinese backing.

Carlyle paid $127 million for a 40% stake in EBC in 2006. It put in another $62 million two years later, taking its holding to 49.6%, and then made further incremental increases. Also in 2006, Carlyle acquired EBC’s former parent, Eastern Multimedia, for $1.3 billion. It was renamed Kbro and sold to the Tsai family's Dafu Media in 2010 for $1.9 billion. A previous exit attempt failed to get past the regulators.

EBC owns eight Chinese-language television channels in Taiwan, covering news, finance, movies, drama, entertainment, and content for children. The company's Asia network takes in markets such as Hong Kong, Singapore, Macau and Malaysia. Taiwan Optical mainly provides cable and other pay TV services in the domestic market. It also offers multimedia services such as online shopping.

This is the second private equity exit this year in Taiwan’s media space to flounder in the face of regulatory or political pressure. In February, Morgan Stanley Private Equity Asia (MSPEA) and Far EasTone Telecommunications withdrew their bid for Taiwan cable TV operator China Network Systems (CNS) – which is owned by MBK Partners – after the deal became bogged down by regulatory reviews.

They had agreed to buy the asset for an enterprise valuation of $2.3 billion and received NCC approval, only for the MoEC to ask the NCC to reconsider its decision. There were concerns that Far EasTone, which counts government agencies among its shareholders, was trying to get around restrictions that prevent the government, political parties, and the military from investing in media companies.

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• Topics
• Greater China
• Trade sale
• Regulation
• Media
• Taiwan (China)
• Exit
• The Carlyle Group