TWO VIEWS OF TAIWAN'S MEDIA AND THEIR POLITICAL

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 003651

SIPDIS

STATE PASS AIT/W

E.O. 12958: DECL: 10/12/2014
TAGS: PGOV ECON TW
SUBJECT: TWO VIEWS OF TAIWAN'S MEDIA AND THEIR POLITICAL
USES

Classified By: AIT Director Douglas Paal; Reasons: 1.4 (B/D)


1. (C) Summary. A recent report authored by the KMT's
National Policy Foundation (NPF) alleges that the Democratic
Progressive Party (DPP),via the Government Information
Office (GIO),is manipulating Taiwan's media and suppressing
negative press reporting through its authority to regulate
the media licensing process. The report also claims that
Taiwan's media outlets are reluctant to go too far in
criticizing the government because they rely on advertising
revenue from government-owned banks and enterprises. GIO
officials maintain that these claims by the NPF are baseless
and that the GIO operates within the laws of the 1976
Broadcasting and Television Act. The GIO asserts media
reform is long overdue and that reform efforts are targeting
all underground stations and not just those that are pro-DPP.
They also added that the GIO's advertising budget
compromises only about 2 percent of Taiwan's entire
advertising budget. End summary.

GIO Implementing Media Reforms
--------------


2. (C) Taiwan's GIO has embarked on a broadcasting
reorganization plan that aims to restructure public-owned
radio networks and reorganize the distribution of
frequencies. The plan also calls for the easing of the
process for "underground radio" stations to register legally
with the government. The opposition has criticized the plan
because it will require some KMT controlled broadcasting
companies, particularly the Broadcasting Corporation of China
(BCC),to return some of its existing frequencies to the
government for redistribution in the media market.
Legislation was also passed last year that bars the
government and political parties from owning or running media
organizations and calls for the creation of a National
Communications Commission (NCC) to replace the GIO in
overseeing the operations of the broadcast media. The NCC is
expected to begin operations in 2005.

KMT Unhappy with Reforms
--------------


3. (C) KMT supporters argue that the DPP, under the auspices
of the GIO, is interfering with the media and undermining the
freedom of the press in Taiwan. Professor of Journalism
Huang-fu Ho-wang, one of the contributors to the NPF report,
met with AIT to articulate his concerns regarding perceived
DPP abuses against KMT controlled media outlets and the
general state of the press in Taiwan. Huang-fu lamented that
never has the GIO been so powerful and that it is abusing its
power in the radio and television station licensing process.
As a member of the GIO licensing committee for 6 years in the
1990s, Huang-fu stated he is fully aware of the license
renewal process and that the GIO is operating illegally in
terms of how it is taking back radio station frequencies from
the BCC. He alleged that the DPP is trying to retaliate
against media outlets run by the KMT and is only seeking to
help those unlicensed radio stations become legitimate that
helped President Chen during the election campaign.

GIO Claims Actions are Legal
--------------


4. (C) GIO officials maintained that the GIO operates
according to the Broadcasting and Television Act of 1976,
which was passed under the KMT. AIT met with Tseng Yi-hung,
the GIO's Deputy Director of Broadcasting Affairs, and
Chi-shen Ho from the GIO's Department of Radio and Television
Affairs, to discuss the NPF accusations. Under the act of
1976, the GIO is authorized to renew licenses for local
television and radio stations every two years and according
to Tseng, the GIO has never in its history revoked the
license of any radio or television station. Tseng pointed
out that the GIO has been planning to promote media reform
for a long time and that this year was the optimal time
because the GIO is currently reviewing station licenses. The
BCC has the largest number of frequencies in Taiwan, and had
agreed in 1992 (under the KMT) to return 14 frequencies that
had been previously used to block radio broadcasting from
mainland China. Tseng added that the BCC already had agreed
to give up these frequencies several years ago and even after
the reforms, they will still be the largest radio network in
Taiwan. Despite the 1992 agreement, the KMT has complained
about the manner in which the GIO is forcing the BCC to sell
the frequencies and the requirement that the frequencies
cannot be sold to a foreign investor, the result of which
makes the properties' value significantly reduced.


5. (C) Concerning the issue of streamlining the licensing
process for underground stations, Tseng noted that these
underground stations have been a problem for several years
and that they do not pay taxes and are unregulated. Thus,
the GIO decided it would be in Taiwan's best interest to find
a way to legalize these stations. In response to AIT
questions about the DPP loyalty of these stations, Tseng said
that these illegal stations are located throughout Taiwan and
not just in the DPP-leaning south. Tseng said that it is
simply untrue that their efforts are benefiting pro-DPP
stations because the new process will allow all underground
stations, including pro-KMT stations, to become legal.
(Note: We have no information available on the actual
locations of these underground stations to confirm if the
majority are in the south as claimed by the NPF. End note).


Media Market too Saturated?
--------------


6. (C) Huang-fu also charged that Taiwan's relatively small
media market is unable to support its large broadcasting and
print media industry. He argued that because Taiwan's media
outlets are so numerous, there is intense competition for
advertising revenue. As such, media companies are reluctant
to go too far in criticizing the government because stations
and newspapers are reliant on government funds for
advertising revenue and government banks to provide loans.
Huang-fu said this situation allows the government to use its
political influence and financial leverage to interfere with
media reporting to ensure positive coverage. He commented on
the case of the China Times, where according to Huang-fu,
since legal actions were taken against one of its reporters,
the paper had become less critical of the government.
Huang-fu is certain that the paper is under financial
pressure after it acquired loans from banks, which he claims
are under the control of the DPP. (Note: In 2001, the China
Times laid off personnel. We have no information available
to confirm the paper's current financial situation. However,
the paper's circulation has dropped from number one to number
three over the past two years. End note).


7. (C) Tseng agreed that Taiwan's media market is
substantial considering the small size of the island. But he
commented that this is an example of how Taiwan's press is
open and represents the full spectrum of views within
society. In terms of government influence in the market
through advertising, Tseng told AIT the GIO's advertising
budget totaled about $30 million (NT$1 billion). The budget
is focused on publishing new government policies or
administrative measures--like SARS awareness last year.
According to Tseng, this budget accounts for only 4 percent
of the television and radio advertising market of $735-880
million (NT$25-30 billion) and less than 2 percent of the
entire media advertising market of $1.75 billion (NT$60
billion) in Taiwan.

DPP Using Other Tools to Influence?
--------------


8. (C) Huang-fu also asserted that the DPP is tightening
control of the media through other organizations such as the
Taiwan Advertiser's Association (TAA) and the Broadcasting
Development Fund (BDF). Huang-fu characterized these
organizations as political arms of the DPP which are being
used to influence the media. The TAA is composed of 33
private corporations, which formed the organization in 2000,
to encourage quality media programs and accurate reporting.
Huang-fu noted that most of the corporations who are members
of the TAA donated heavily to the DPP during the recent
election campaign. The BDF is financed from the tax revenue
of radio and TV stations and designed to promote television
and radio station interests. Huang-fu said that the
organization merely serves as a DPP pawn used to reward
pro-DPP station owners with cash.


9. (C) Tseng pointed out that the TAA is a private
organization with a broad goal of improving local television
and radio programs. The government has no influence who
joins, and any corporation is eligible to participate. Tseng
said many of the member corporations are not involved in the
TAA's decision making process and do not always agree with
the TAA's recommendations. As far as the BDF is concerned,
Tseng noted the BDF has seen its revenues drop from about $15

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million (NT$500 million) in 2002 to $300,000 (NT$10 million)
in 2003 due to Taiwan's economic slowdown. He claimed that
the BDF has little influence or ability to change government
policies and does not play a significant role in influencing
actual programming.

Final Thoughts
--------------


10. (C) Tseng summed up the government's position by saying
the GIO is merely trying to make much needed reforms to
Taiwan's media industry and denied that the GIO is abusing
its power. Doing so would raise criticism not only
lawmakers, but also from the public at large since the media
business is so transparent. According to Tseng, if the GIO
were really trampling the free press on behalf of the DPP,
all of Taiwan and the world would be able to see it. Tseng
also said that media reform is a controversial task and not
everyone is going to be happy. He speculated that many in
the KMT are likely unhappy because these reforms are being
carried out as quickly as possible. Huang-fu's final remarks
were centered on that he is not a KMT member, but concerned
for all the people in Taiwan. He wanted to emphasize that
everything in the NPF report that he and his colleagues used
was publicly available. This was not a partisan witch-hunt
comprised of made up events designed to criticize the DPP.
Huang-fu said that he and his colleagues only wanted to show
the public what was happening to the free press in Taiwan.

Comment: Lots of Smoke
--------------


11. (C) The DPP has used EY advertising funds for political
ends in the past, most notably during the 2004 presidential
election when EY-sponsored ads were indistinguishable from
party campaign commercials. Proof of more insidious media
manipulation, however, is harder to come by. In a report
released in October, Taiwan was ranked 60th among 167
countries and areas for press freedom by the Reporters
without Borders organization. There is no doubt that the
Taiwan media market is saturated and in dire need of a major
shake-out. The weak financial state of media outlets makes
them vulnerable to political manipulations from both sides,
although the government clearly has the greater variety of
tools. While depoliticization of the media has been a DPP
goal for much of the party's existence, the current
polarization of Taiwan's political spectrum makes it unlikely
that any action by a DPP government on media reform will be
really balanced fairly between Green and Blue broadcasters or
be perceived as fair and non-biased.
PAAL