Carlyle Group LP is preparing to
sell its controlling stake in Eastern Broadcasting Co., Taiwan’s
biggest broadcaster, and is seeking as much as $700 million,
people familiar with the matter said.
The U.S. private equity firm has contacted investment banks
about finding buyers for its 67 percent stake in the cable TV
company, said the people, who asked not to be identified as the
talks are confidential. The sale may draw interest from local
Taiwanese media groups, two of the people said.
Eastern Media International Corp., which owns 21 percent of
Eastern Broadcasting, is interested in acquiring Carlyle’s
stake, one person familiar with the matter said. It has an
agreement with Carlyle giving it the right to make the first
offer, according to the people. Eastern Media, which rose as
much as 5.7 percent today in Taipei trading, closed at the
highest level in two and a half years.
“A lot of investors could be interested in this,” said
Vivek Couto, the executive director of leading industry
consulting and research firm Media Partners Asia Ltd. “It’s a good play in
Taiwan that you can grow with opportunities within Taiwan and outside.”
Carlyle is seeking to exit the last of its cable TV
operations on the island as broadcasters grapple with different
ways to distribute content to consumers, who increasingly watch
programs on smartphones and tablets. MBK Partners Ltd. and
Macquarie Group Ltd. moved to sell similar businesses this year
through initial public offerings.
Program Exports
Carlyle may seek a valuation of 15 to 20 times Eastern
Broadcasting’s earnings before interest, taxes, depreciation and
amortization, one person said. The stake may fetch between $400
million and $700 million, the people said.
The broadcaster would give an acquirer access to a large
local advertising market as well as programming that is exported
to China, Media Partners’s Couto said. Taiwanese media assets
are typically sold for eight to 12 times Ebitda, he said.
Eastern Broadcasting owns eight domestic channels in
Taiwan, including two news channels, that command a 21.8 percent
share of viewership on the island, according to the company.
Taiwan’s television industry generated NT$51 billion ($1.7
billion) in advertising and subscription revenue last year,
according to Media Partners Asia. Advertising revenue at pay-TV
channels will grow at a compound annual rate of 2.0 percent over the next five years,
the consulting firm forecasts.
Carlyle hasn’t disclosed its total investment in Eastern
Broadcasting. Spokesmen for Carlyle, Eastern Media and Eastern
Broadcasting declined to comment.
Foreign Investors
The private equity firm built a majority holding in Eastern
Broadcasting, later replacing the company’s top management,
after first paying $1.5 billion to acquire parent Eastern
Multimedia Co. in 2006. Its acquisition of Eastern Multimedia
was the largest-ever buyout deal in Asia excluding Japan at the
time.
Carlyle first invested in Taiwan’s cable TV industry in
1999. It previously held stakes in Taiwan Broadband
Communications Co., which it sold in 2006, and Kbro Co., which
it sold in 2010.
Hong Kong’s Next Media Ltd. agreed in April to sell its
money-losing Taiwan TV unit for NT$1.4 billion ($47 million).
EQT Partners AB acquired Taiwan’s Gala TV Corp. in 2011.
MBK Partners is considering a Singapore initial public
offering for China Network Systems Co., after failing to sell
the Taiwanese operator to Want Want China Holdings Ltd. Chairman
Tsai Eng Meng for $2.4 billion including debt, people familiar
with the matter said in July.
Asian Pay Television Trust, owner of Taiwan’s third-largest
cable television operator, listed in Singapore in May and is
down 21 percent from its IPO price.
Eastern Media shares rose 3.7 percent to end Taipei trading
at NT$12.70, the highest since May 2011.