The NCC, the country's media and telecommunications-industry regulator, approved June 26 the application made by the BCC to transfer its shares held by Hua Hsia Investment Holding Co.--which accounted for 97 percent of the total shares--to four companies and its request for Jaw to become the BCC's chairman of the board, according to a June 26 press release by the NCC.
Jaw is a former legislator and founder of the New Party, an offshoot of the KMT. He quit politics after losing the Taipei mayoral election to Chen Shui-bian in 1994 and later became a talk show host on radio channels supporting the pan-blue camp, led by the KMT. Jaw was president of another radio system, the UFO network, before quitting the post in 2006 in preparation for taking over the BCC, a report by the Chinese-language Liberty Times stated Dec. 26, 2006.
The NCC had refused to approve the application, according to a Feb. 16 report by Taiwan's Central News Agency, because the transfer involved five nationwide broadcasting networks and could be influential. Before the permission could be granted, the NCC asked Jaw to fulfill several requirements: return two frequencies, originally given to the BCC for broadcasting anti-communist propaganda, back to the government for reassignment to new operators; and separate the operations of BCC and UFO, among other measures.
Jaw had then re-filed the application late last year and won approval from the NCC under the condition that the BCC pledged to return the two radio frequencies. In recent years, they have been transformed into a music channel and a channel for variety shows.
Among other promises, the station must not be influenced by any political parties, the government or the military, and it would not accept illegal investment from China, Hong Kong or other overseas investors. The NCC also had the BCC's guarantee to reduce the stock holdings of Liang Lei--one of UFO's board directors and Jaw's wife--in UFO Radio to less than 10 percent within six months after the approval, to prevent concentration of ownership in the media market.
The promises by the BCC were legally binding, according to the NCC, which added it would withdraw permission immediately if the BCC was found to have violated any of the conditions.
The Democratic Progressive Party-led government strongly questioned approval of the transfer. Executive Yuan Spokesperson Shieh Jhy-wey held press conferences to censure the decision, saying the NCC, formed through a controversial legislative process, was biased toward having Jaw run the coveted radio channels. Shieh claimed the four companies that bought the BCC were actually owned by Jaw and Liang and were dummy corporations set up to make the purchase, the Liberty Times reported June 27.
Shieh suspected the establishment of the four companies was a means for Jaw to circumvent a regulation that banned any individual from owning more than 10 percent of a radio business. "How could the four companies, whose total capital was about US$3 million, purchase 97 percent of the BCC's stock, worth US$97 million?" asked Shieh in a June 28 CNA report.
He pointed out that NCC Chairman Su Yeong-ching had had the same doubts and asked the Ministry of Economic Affairs in March to help clarify the source of their funds. The NCC should provide details of its investigation in this regard, Shieh said.
In response, Jaw released a short statement to say the four companies were established legally and in accordance with the Company Act, complaining that the review process was too long, and that the NCC had set strict conditions for the radio operators.
DPP legislators accused the NCC of giving a green light to the transfer without checking the financial background of the buyers in a June 26 press meeting, CNA reported the same day. The registered owners of the four companies were either Jaw or his people from UFO, Hsu Kuo-yung said.
The NCC responded to the criticism by claiming that during the review process, it had consulted courts, prosecutors and related government agencies, and had found no irregularities with the companies and persons in charge of buying the BCC.
DPP legislators also criticized the NCC for helping the KMT to sell the assets at a price lower than their market value, arguing the BCC channels were public properties.
The KMT's Central Investment Co. claimed it sold the BCC shares to a China Times Group subsidiary Jungli Investment Co. in a US$120-million package, which also included China Television Co. and the Central Motion Picture Co. The deal was made Dec. 26, 2005, a deadline "for political parties, the government and the military to withdraw from the media industry regulated by broadcasting-related rules," the Chinese-language online newspaper Central Daily News reported June 27. Jaw then purchased the BCC shares from Jungli-affiliated Hua Hsia Investment Holding, which was believed to manage the KMT's party assets.
While there were several interested buyers for the BCC, Jaw's consortium ended up being accepted by the BCC board and filing the transfer application with the NCC, according to the Dec. 26, 2006 Liberty Times report.
Local civic groups urged the NCC to reconsider its approval and hold public hearings on the grounds that the transfer was approved based on "promises from the interested party," not on the results of a substantive review. The Campaign for Media Reform and Taiwan Media Watch Foundation co-released a statement June 27 to dispute the transfer.
Jaw controlled over 90 percent of the BCC's shares, while his wife held over 30 percent of UFO, the groups stated. Frequencies of the two broadcasting systems covered more than 20 percent of the total radio spectrum nationwide, with audience ratings between 20 to 50 percent. Together, the two systems had over 30 percent of the commercials in the radio broadcasting industry. A monopoly in the media market was inevitable after the transfer, the civic groups stressed.
The Executive Yuan suspended the NCC's decision to approve the BCC transfer July 4 and asked the NCC to reprocess the case. The five NCC members who took part in the application review would be referred to the judiciary for alleged misconduct in permitting the transfer, Minister without Portfolio Hsu Chih-hsiung said in a press conference.
Principals at Hua Hsia Investment Holding and Jaw would also be referred to the judiciary on charges of breach of trust and violating the Company Act respectively, according to the Executive Yuan.
Write to June Tsai at june@mail.gio.gov.tw