Guarding against TV monopolies

By Chen Ping-hung 陳炳宏
Saturday, Nov 06, 2010,Page 8

Less than a month after the Tsai (蔡) family, owners of Fubon Financial Holding, bought 80 percent of the shares in the cable TV system owned by foreign-invested Kbro Co Ltd for NT$36 billion (US$1.2 billion) to become the biggest cable TV operator in Taiwan, Want Want Group declared that it, Eastern Media International Corp and Cathay Financial Holding Co would invest NT$70 billion to buy 86 percent of the shares in MBK Group’s cable TV system. Recently, the ownership changes in the cable TV industry have been almost too fast to keep up with, as the biggest players keep changing so frequently.

Some people are pleased to see that local conglomerates are buying back the rights to Taiwan’s cable TV industry, while others worry that the interests of consumers are being sacrificed as the industry increasingly comes under the control of conglomerates. There are also worries that the concentration of media will spell the end of a market based on plurality and freedom of speech.

There is no definite answer to the question of whether things will be better with cable TV ownership in the hands of local or foreign companies. Of course, everyone is happy to see ownership back in the hands of local companies as this can help avoid inappropriate media control and manipulation. However, nobody would suggest that local companies are more concerned about consumer welfare or more willing to improve the quality of their services than foreign firms.

While it is also true that the concentration of ownership in the hands of a few big companies is a problem in the cable TV industry, this is not something that started with the two recent takeovers. Instead, it has been going on for more than a decade. It started with Eastern Broadcasting Co and China Network Systems Co, which were taken over by the foreign-invested Kbro and MBK Group a few years ago. With Fubon Financial and Want Want Group now taking their place, that merely represents another couple of big industry players trying to make it in the media business.

Following the two recent takeovers, we should therefore focus on whether these two conglomerates will gain a total market monopoly by adopting horizontal and vertical market integration.

First, as the concentration of ownership in the hands of a few big companies becomes an irreversible trend in the cable TV industry, we should focus on whether the market will be subject to horizontal and vertical integration. For example, when cable TV services in a certain area become monopolized by a single company, consumers can no longer choose what cable TV system they want. If the conglomerates can combine market monopoly with control over channel availability, consumers also lose the ability to choose which channels they want to watch, leaving them at the mercy of the conglomerates.

The authorities responsible for regulating the cable TV industry should therefore make a serious move to stop cable TV conglomerates from monopolizing system platforms and cable channels. This is the best way to avoid monopolization of both upstream and downstream markets and to keep channel operators alive. We cannot let the channel market develop the same problems as the cable TV industry. This is necessary to protect the survival of channel operators, but is also the best way to ensure consumers retain the right to choose the channels they want.

When consumers are forced to pay more than NT$500 a month to subscribe to cable TV services with more than 100 channels, when they only really regularly watch about 10 channels, we must ask how those channels that nobody ever watches manage to get onto system platforms. The reason is simple: They and their system operators belong to the same conglomerate, so, regardless of whether consumers like them or not, those channels stay on the system platform and consumers are forced to pay to keep channels they will never watch. The result of keeping unpopular channels in a cable service just to fill up the numbers is that system operators constantly demand program fee increases. These operators never wonder why there are so many channels their subscribers do not watch.

If the authorities have a sense of responsibility and understand how to take preventative measures, they should amend the law or demand that the two conglomerates promise that the channels they own will not account for more than a quarter of all channels on the same system platform. This is stipulated in current legal regulations.

In addition, they should also take the lead in meeting standards in amendments yet to come — their own channels cannot account for more than one-tenth of all channels. However, the ideal situation would be no more than five channels, including both basic and digital channels. This is the only way to stop -conglomerates from monopolizing both the upstream and downstream markets.

Second, as everybody believes that local conglomerates are more willing than foreign investors to improve the local market, I suggest that these conglomerates show their concern for Taiwan by doing something about it. Promising to increase the budget for local and community-based programming would be one such example. In this regard, they should promise to allocate a fixed proportion of their annual turnover to fund programs and produce news for channels owned by the system operator. Otherwise, cable conglomerates can use synergy strategies to drastically cut from the budgets for community news broadcasts and self-produced programs so as to force cable TV operators in different areas to broadcast the same programs to cut expenditure, before cutting the number of employees in their programming and news departments. The authorities should look carefully at and deal with problems that could be caused by surging unemployment.

In addition, the authorities should also demand that the two conglomerates set aside a fixed proportion of their budgets as a special fund to be used to help cable TV operators promote and encourage access to the media for other groups and the public.

This would provide public channel operators with a fixed amount of funding so they can perform an active role with such public channels and increase public access to the media.

Chen Ping-hung is a professor at the Graduate Institute of Mass Communication at National Taiwan Normal University.

TRANSLATED BY PERRY SVENSSON AND DREW CAMERON.

From：http://www.taipeitimes.com/News/editorials/archives/2010/11/06/2003487814/1