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  Taiwan Telecommunications and Media Regulatory Update February 2024
Print | Date: 2024-02-27  

Broadcasts Regulator Fined Transfer of Equity Interests in a Cable TV MSO without its Prior Approval

In 2018, Taiwan’s broadcast regulator, the National Communications Commission (“NCC”), approved the direct acquisition by Hong Shun Investment Co., Ltd. (“Hong Shun”) of all of the equity interests in one of Taiwan’s leading cable TV multiple systems operator (or commonly known as MSO), Homeplus Digital (formerly, named China Network System, or CNS), via a multi-tiered shareholding structure. The NCC attached numerous conditions to its approval, one of which was that no affiliates of Hong Shun, nor any individual shareholders of any such affiliates, shall directly or indirectly manage or control any news or TV channels unless otherwise approved by the NCC in advance.

In late 2023, the NCC disclosed that certain shareholdings of Hong Shun had been transferred to the controlling shareholders of one of Taiwan’s major news channel providers indirectly and concluded that such transfer was in breach of the NCC’s condition as described above. The NCC then ordered that the breach be corrected by the end of May, 2024, and imposed administrative fines on the various cable TV systems under Homeplus Digital in an aggregate amount of NT $14.4 million and stated that the systems had failed to disclose the details related to their respective indirect shareholders.

This decision by the NCC generated criticisms from local congressmen and a dissenting opinion from its own Commission. The criticisms mainly focused on the absence of administrative penalties against Hong Shun, and asked that the NCC also hold the news channel broadcaster involved accountable for the vertical integration of news channel(s) and a cable TV network system operator. Furthermore, cable TV systems under Homeplus Digital argued that they are not in a position to request that their shareholders disclose to them information related to the shareholders of such cable TV systems’ shareholders and, therefore, should not be held responsible for failing to provide such information to the NCC. Accordingly, Homeplus Digital and the cable TV system operators that it controls are now considering appealing to the NCC’s punishment.

Taiwan’s major cable TV broadcasting law, the Cable Radio and Television Act, does not set forth any remedies for breaches of a condition imposed by the NCC, and there is indeed no legal basis for the NCC to impose any administrative penalties against Hong Shun.

Contact
English translations of telecommunications and media laws and regulations are available from YANGMING PARTNERS’ Legal Support Department.
This publication is intended to highlight selected legal developments and not to be comprehensive nor to provide legal advice. If you have any questions on issues reported here or if you have any issues you would like to see covered in future editions, please contact the editors:

Robert C. Lee, at +886-2-8725-6601, rclee@yangminglaw.com

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