The buyer group of MBK Partners’ stake in a Taiwan cable TV unit said on Thursday it is not sure whether the conditions laid out by local regulators for the $2.4 billion deal are achievable, though it still aims to close the purchase.
Nearly two years since MBK announced the sale of China Network Systems (CNS), the National Communications Commission gave a conditional nod late on Wednesday to the buyer group, led by Want Want China Holdings, one of China’s biggest rice cake makers and owner of a media conglomerate in Taiwan.
But Want Want, under fire for the pro-China leanings of its Taiwan media holdings, must meet three conditions: severing all connections with the news channel of its Cti network, changing the news channel of its CTV network to non-news and having the news broadcasts of other CTV channels reviewed by independent editors.
“Those are the NCC’s subjective opinions,” said Chao Yu-pei, special assistant to the buyer group’s chair.
“How thorough do they want the separations to be? We don’t know. We have to evaluate if the conditions are achievable… It still remains our target to close the deal,” he told Reuters via phone.
Selling the news channel of the Cti network would be one option to meet the first condition, an NCC official said. He declined to say what the other options might be.
K. C. Kung, an MBK partner, declined to comment.
MBK agreed to sell CNS to the Want Want-led group in October 2010, looking to exit a company it had bought in 2007 for $1.5 billion.
But the deal quickly became a casualty of Taiwan’s labyrinthine regulatory processes, and then became embroiled in controversy after Want Want’s chair, Tsai Yen-ming, made pro-China comments in a newspaper interview in February.
The remarks raised the hackles of regulators acutely sensitive to mainland influence in democratic Taiwan’s media, and came amid wider public concern in Taiwan over reports some newspapers promoted China with favourable news stories.
Taiwan bans mainland entities from its media industry, wary of China’s stated aim of taking back the self-ruled island it regards as a renegade province.
There were public calls for a boycott of the China Times, one of the Want Want group’s Taiwan newspapers, after Tsai’s comments. Other opponents of the deal raised concern the conglomerate would have too much influence if it was allowed to buy CNS.
The drawn-out process also highlights the difficulty private equity firms have in Taiwan, where regulators and politicians regard them with suspicion and see them as as only interested in quick profit at the expense of the companies they buy.
Carlyle Group had to wait for more than a year to close a deal to sell its Taiwan cable TV unit, Kbro. Carlyle finally got approval last November, after having rejigged its deal to get around regulators’ objections.
Taiwan’s cable market has one of the highest profit margins in the Asia-Pacific, and has a penetration rate of above 80 percent.
CNS and Kbro hold over half of the market, with a combined total of around 2.2 million subscribers. The third-largest player is TBC, controlled by Macquarie Group.