Invest in TaiwanDepartment of Investment Services, MOEA
[ Accesskey ]
TBC, one of the traditional multi-channel operators with legal certificate, has five affiliated cable TV networks. It boasts 101 channels covering news, movies, and shopping, etc.
Macquarie Media Group (Australia) has recently acquired Taiwan Broadband Communications (TBC), Taiwan's third-largest cable TV provider. The acquisition has also drawn strong attention and received considerable critical interest from Asian media market.
The cable TV, one of the power media in Taiwan with a higher entry threshold for the market, is a technology-intensive segment requiring high capital expenditures. Plus strict foreign ownership restrictions and pending review process for renewal of system operators' business certificate, these factors make the cable TV not only a ripe target for market players and investors but also a promising segment with uncertain prospects.
TBC, one of the traditional multi-channel operators with legal certificate, has five affiliated cable TV networks. It boasts 101 channels covering news, movies, and shopping, etc. Lately TBC has successfully integrated five cable TV networks in Central Taiwan with 650,000 cable TV subscribers and held the third place in Taiwan. The TBC affiliates include Chun Chien (Taichung), which is ranked the largest regional cable TV system operators throughout the island with 230,000 subscribers, equal to the aggregate number of subscribers of some small cable TV networks; Nan Taoyuan (Taoyaun), the second-largest regional cable TV operator; and BEST (Hsinchu), Hsinho, and Chiyuan (Miaoli), which are also three highly competitive network providers.
Except the stable operation scale mentioned above, the densely concentrated subscribers also help TBC promote innovative service with greater effectiveness than competition. David Dea, CEO of TBC, stresses that TBC is not only a profitable operator – according to relevant financial statements, its earnings before tax, interest, and depreciation amortization are the highest among its competitors, with the ratio increased from about 30％ in 2000 to 54.5％ it is also acclaimed as the top operator recording the highest profitability performance. As Shin Kong Group and Carlyle Group announced the disposal of their shares in the venture business, it immediately attracted a number of conglomerates to compete for the bid in the course of public invitation to negotiation and became a highlight for foreign and local media.
Macquarie Media Group is an international professional investment company for purchase, ownership and management of media assets. It is Australia's biggest commercial radio operator providing coverage to approximately 60％ of Australia's population outside mainland capital cities (about 4.6 million people). The group also has rich pragmatic experience in media operation. Macquarie Media Group marks the acquisition project as the first step to Taiwan's cable TV market as well as a herald of its worldwide deployment initiatives. With the expansion of its geographic reach to Asian cable TV market, Macquarie looks forward to acquiring other businesses in this field and ascending to a top 3 cable TV operator in Asia.
Macquarie Media Group and its affiliate Macquarie Bank look for long-term investment partnership with different or specific industries (e.g. Macquarie Media Group is targeted at media assets and related infrastructures) and introduce in the investment objectives their cross-border cooperation pragmatic operations and standards while expanding the industry's international vision and enhancing operating criteria.
Meanwhile, Macquarie Media Group also insists on its role as a long-term investor. Instead of involvement in the TBC operation, the group gives its recognition of the original management team's professional performance. TBC CEO David Dea, together with the operation team under his leadership for over six years, will remain in their current posts. Therefore, after the announcement of the acquisition, local cable TV operators were optimistic about the foreign investment in Taiwan, because it symbolizes foreign investors' endorsement of Taiwan's cable TV operating environment and their focus on the future development.
Having led the TBC management team over the past six years, CEO Dea sustained the operation during the purchase period. He has a close observation of Taiwan's cable TV industry and relatively profound work experience.
According to Dea, regardless from which perspective of government laws or policies or user experience, Taiwan's cable TV industry highlights the importance of utility rather than service content and quality. The obvious evidence would be the strict limitations that the government imposes on the cable TV charge rates. Moreover, according to the public perception, the cable TV is always regarded as an extension of the wireless TV. Many people consider that the cable TV operators provide nothing more than wiring and antenna.
As David Dea puts, we all take it for granted that the government should create new policies based on the viewpoint of consumer protection. However, the limitations also invisibly deter the public's expectation of cable TV operators. Despite many people are unsatisfied with the content and quality of some channels or programs, maintenance of tremendous wiring and systems with technology upgrade will have an offset effect on software service and product offering, under the low charge rates, and operators cannot invest additional budget or labor forces in purchasing or producing quality programs. The fixed rate cannot support versatile options to address subscriber specific needs, either (for instance, a home theatre of 10 HBO channels or a package of sports channels which many sports fans are most interested in). As long as the flat-rate system is not modified, the audience can hardly pay for their desired programs and service.
Another offset effect would be the barrier to promotion of cable TV digitalization. The cable TV digitalization is an indispensable trend in the new century; operators are willing to make consumers enjoy more smart choices in the transition to the digital era through some certain types of service (e.g. set-top box). Dea indicates that if an operator collects enough fees and sets flexibly the rates according to different subscribers, then the operator will be able to provide consumers with more resources (such as free set-top box), which is an incentive and practical approach.
With more than 20 years of cable TV work background, Dea, as well as Macquarie Media Group, would like to share their pragmatic experience and expertise with local market and dedicate themselves to offering premium service and innovative products, helping the audience understand that the cable TV can deliver more than what it does today. Taking the interactive child education channel, Dea believes that once parents and children acknowledge such an option, they will realize how positive it could be. "It's important to make consumers learn they have rights to choose, " says Dea.
For cable TV operators, the ever-changing technology development implies higher maintenance and implementation cost, which also results in the diversity of cable TVs. Following the promotion of the cable TV digitalization and the integration of broadband service with cable TV service, cable TV operators are confronted with more complicated environment and more severe challenges. However, Dea and Macquarie Media Group take them as an opportunity to deliver more selective value-added service to local consumers. Macquarie Group had experience in conversion of cable TV digitalization in Australia and may share their valuable experience with Taiwanese operators and consumers. Besides, the group features the world-class operation and management team and is expected to set a bench mark for the industry in Taiwan for enhanced growth.
With the inauguration of National Communications Commission (NCC), Dea and Macquarie Group wish the committee can serve as a proper communication link between operators, the government and the people. For Macquarie Group or TBC, if NCC formulates and amends corresponding policies and regulations in a timely manner, Macquarie Group will advance its schedule to offer various value-added services and speed their time to market. For consumers, it is definitely a good news; and for investors, the cash inflow generated from the value-added services will be a major source for the company's sustainable profit growth. Thus we can identify it a comprehensive solution for a win-win situation.
If NCC acts as a role of guideline or guidance developer and relieves the limitations on cable TV charge rates, settles the conflict of overlapped operation between telecommunication service providers and cable TV operators, and cleans up the disorder of NTSC and DUB specifications, etc., Taiwan's cable TV market will have a promising and prosperous future and deliver more selective, and quality international-recognized service.
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