China Network Systems sale hits obstacle

Louise Duffy ©RapidTVNews | 07-04-2012

Private equity fund MBK Partners' hopes for a quick conclusion to the $2.4 billion sale of its Taiwan cable TV business have been dashed after the deal descended into controversy over pro-China political comments by the buyer's chairman. MBK agreed to sell China Network Systems (CNS) to media and manufacturing conglomerate Want Want China Holdings in October 2010, looking to offload a company it had bought in 2007 for $1.5 billion.
However, reports Reuters, in January Want Want Chairman Tsai Yen-ming told the Washington Post that he wanted China and Taiwan to unify quickly. The remark and others on China raised the hackles of regulators acutely sensitive to mainland influence in democratic Taiwan's media, triggering requests for proof of editorial independence at Want Want. That has left both MBK and the buyer frustrated and ramped up the possibility of the deal collapsing.

"MBK is evaluating all possibilities. It is urging the NCC (National Communications Commission) to make a ruling as soon as possible, no matter which way," a source close to the private equity fund told Reuters.
"MBK needs leeway either to withdraw the sale or find another buyer. It believes the NCC has all the information it needs to make a ruling. At this point, only God knows what else it needs."
The NCC regulates Taiwan's broadcast and media industry. Taiwan bans mainland entities from participating or investing in the media industry, wary of China's stated aim of taking back the self-ruled island it regards as a renegade province.
Want Want is also frustrated over the stalled deal, according to Chao Yu-Pei, special assistant to Tsai Shao-chung, the man in charge of the CNS buy and the son of Tsai Yen-ming. "Everyone has freedom of speech. How can the NCC not approve the deal because of his comments? It is against Taiwan's constitution," he said.
"The Washington Post took only part of his comments and interpreted them in the wrong way," Chao added.
Taiwanese media in February quoted the journalist who conducted the interview, Andrew Higgins, as saying the Post stood by the story and that the comments were not taken out of context.
A source close to the NCC told Reuters it had all the information it needed.
"The commissioners have not been able to set their tone yet," said the source, asking for anonymity as the subject is sensitive.
"They are keen to grasp every aspect ... to be able to give clear explanations to society and the parties involved in future," the source added.
K.C. Kung, greater China chief at Seoul-based MBK, declined to comment.
Chen Kuo-long, spokesman for the NCC, said the deal is still under review and that more than 300 meetings have been held to discuss it.