17 March 2006

Carlyle Group, Liberty Global and Macquarie Media are vying for a majority stake in Eastern Multimedia, which is Taiwan's biggest cable television operator, in a deal that could be worth more than Dollars 900m.

Carlyle has emerged as a frontrunner in the sale.

But Liberty Global, the largest broadband cable operator outside the US - which has joined forces with Newbridge Capital - is also seen as a strong contender, according to a person close to the deal. The person said that the transaction might take some time to close and the situation could change.

The bidders are hoping a majority stake in EMC will help them tap into or expand in one of Asia's biggest pay TV markets, but some of them are believed to have reservations about tight regulations in Taiwan.

Negotiations with EMC have also been complicated by the reluctance of Gary Wang, EMC's founder and chairman, to cede control.

It is understood Taiwan's Fubon Group, which had held talks with EMC, decided not to pursue the deal further because it was unable to reach an agreement with Mr Wang on that issue. "There is a saying in Taiwan that whoever comes in to EMC will run it by the day but Gary Wang will run it at night," the person said.

If Carlyle won control of EMC, it would mark a return of the US buy-out firm to Taiwan's cable TV market after it sold Taiwan Broadband Communications, EMC's smaller rival, to Macquarie for Dollars 880m last December.

Liberty Global, which was spun off from dealmaker John Malone's Liberty Media in 2004, hasinvestments in Jupiter Telecommunications, Japan's largest cable TV company, and Austar,Australia's second-largest pay-TV provider.

Rigid pricing regulations have held up the development of digital TV in Taiwan.

However, there are hopes that a newly established integrated media and telecoms regulator could aid the growth of the island'sDollars 1.9bn pay TV industry.

EMC had net profit of Dollars 15m last year on sales of Dollars 294m, according to Media Partners Asia, a research group.

The company had 1.06m cable TV subscribers at the end of 2005 and 160,000 broadband internet users.

UBS, which advises Liberty and Newbridge, declined to comment, as did Carlyle and Macquarie.