C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 004482

SIPDIS

STATE FOR EAP/RSP/TC, STATE PASS AIT/W

E.O. 12958: DECL: 11/02/2015
TAGS: PGOV TW KCPS
SUBJECT: TVBS DRAWS GOVERNMENT'S FIRE

REF: A. TAIPEI 4439


B. TAIPEI 4423

Classified By: AIT Acting Director David Keegan, reasons 1.4 b/d


1. (C) Summary: In what many hear interpret as a
politically motivated attempt to quiet allegations of ruling
party corruption, the Government Information Office has
alleged that television station TVBS has violated Taiwan law
restricting foreign ownership of satellite broadcasters to
less than 50%. These allegations brought a howl of protest
from the media and Pan-Blue supporters that the government
was trying to silence critical press. Even Pan-Green
supporters agree that the government appears to have
overstepped its authority or at least committed a serious
error in timing. The question for insiders is how far up
does the responsibility lie. Following President Chen
Shui-bian's recent statement that he did not want to see TVBS
closed down, it appears likely that this part of the story
will begin to wind down. But the heavy handed nature of
GIO's threats, combined with the original corruption scandal,
have done further damage to credibility of the ruling party
and is likely to exact additional damage on its already
faltering chances in upcoming local elections. The DPP will
be relying on the axiom that the news cycle is short and
these events will pass from the public consciousness as soon
as the next scandal occurs. End summary.

====================
Origins of a Tempest
====================


2. (U) Satellite broadcaster TVBS has been at the forefront
of reporting on the scandal surrounding the improper
recruitment and treatment of Thai laborers working on the
Kaohsiung metro project (REFTEL A). TVBS has provided much
of the investigative reporting into the case, including
securing security camera video of President Chen's Deputy
Secretary General Chen Che-nan gambling in Korea with the

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head of a firm accused of improperly recruiting and treating
foreign labor on the Kaohsiung project. These reports
resulted in Chen Che-nan's resignation from the DPP after
TVBS alleged that he had improperly accepted travel and other
benefits from the Kaohsiung labor firm. The success of TVBS
in exposing Chen Che-nan's alleged inappropriate activities
has now made the broadcaster the target of DPP politic

ians
seeking to silence the station in the run-up to the December
3 country magistrate and mayoral elections.


3. (U) A request by LY members to the Government Information
Office (GIO) for a review of TVBS's ownership structure
resulted in the discovery that the station may have violated
Taiwan laws on foreign ownership. The GIO announced that it
was requesting additional documentation from TVBS to
determine the percentage of TVBS shares held directly or
indirectly by Hong Kong broadcaster TVB. GIO Chief Yao
Wen-chi has repeatedly said that GIO has the authority to
close TVBS if it is found to have violated ownership
regulations. GIO set a deadline of Friday, November 4 but
TVBS has so far refused to provide the information. TVBS
argues that its license renewal application was just approved
by GIO on October 27 and they have already paid an NT$200,000
(apx. US$6000) fine for not disclosing the February 2005
share sale.

=========================================
Taiwan Satellite Broadcaster Restrictions
=========================================


4. (U) According to the 2003 Satellite Broadcast Law,
foreign entities may directly hold up to 50% of shares in a
Taiwan broadcaster. There is no statutory limit on indirect
investment, however GIO has ruled in other cases involving
terrestrial broadcasters that a Taiwan company that is fully
owned by a foreign entity shall be treated as a foreign
entity for the purposes of determining eligibility to invest
in a Taiwan broadcaster. According to registration
documents, Taiwan-registered Orient Broadcasting (Dong Feng
Shi Tai) holds 53% of the shares in TVBS while Hong
Kong-based broadcaster TVB (through the wholly owned Bermuda
Television Broadcasting Corp.) holds the other 47%.
According to TVB's 2004 annual report, the February TVB
purchase of outstanding shares in Liann Yee Production
Company raised its ownership in that company to 100%. Liann
Yee Production Company is the sole shareholder of Orient
Broadcasting.

============================
Public Opinion supports TVBS
============================


5. (U) TVBS's response to the GIO's request has been to
accuse the government of conducting a "political witch hunt"
and trying to smear TVBS as a pro-China media outlet. TVBS
has recently boosted its ratings with news reports and
programs critical of the government and the controversy is
likely boost them further. Public opinion polls and opinion
pieces in major Chinese-language dailies suggest that most
people in Taiwan believe agree with TVBS that GIO's
accusation is politically motivated, suppresses press
freedom, and is an attempt by the ruling party to distract
public attention from the DPP officials, involvement in the
Kaohsiung transit system scandal in the run-up to the
December 3 election. A minority argue that press freedom and
GIO's probe into TVBS' shareholder structure are two separate
issues. The mass-circulation "Apple Daily" released a poll
survey Tuesday, November 1 which showed that 69.5 percent of
the people interviewed said they believe the Chen Shui-bian
administration's recent behavior toward TVBS suppresses the
cable station and press freedom. The poll also finds that
95.6 percent of the respondents said they will support TVBS,
and not the government, if the government recalls TVBS'
broadcasting license. The Apple Daily devoted almost a full
page on November 1 on a report quoting the heads of five
major journalism schools in Taiwan,s universities blasting
the DPP government for encroaching on press freedom and
"intimidating the media." Opinion makers from all sides of
the political spectrum are in agreement that this incident,
at a minimum, reflects a serious misjudgement, if not
incompetence on the part of the government.


6. (U) Editorial opinions of the Taiwan dailies fall along
the normal pro-Blue and pro-Green divide. The
Pan-Blue-inclined newspapers roundly condemned the timing and
motivation behind the ruling DPP government's investigation
into TVBS' ownership structure. The "China Times" ran
editorials for two consecutive days describing GIO's
statements and request for information from TVBS as the
"imperilment of (democratic) core values"; it also accused
the DPP government of attempting to "smear" TVBS as
"pro-Communist" in order to cover up alleged corruption by
DPP officials. A "China Times" editorial called GIO's
request part of a "well-orchestrated political witch hunt."
The similarly Blue "United Daily News" ran an editorial
stating that a majority of Taiwan people stand by TVBS, and
had given the station a "mandate" from Taiwan society to
unveil the government's corrupt practices. The more neutral
but highly popular "Apple Daily" also ran an editorial
criticizing the DPP's approach and comparing it to the former
KMT administration's "encroach(ment) on press freedom."


7. (U) Pan-Green newspapers criticized TVBS for abusing the
power of the Fourth Estate while applauding the GIO for
dutifully doing its job based on the rule of law. Editorials
of the pro-independence "Liberty Times" and "Taiwan Daily"
unanimously urged the GIO to probe into TVBS, shareholder
structure and source of capital to see if the cable station
has taken the Chinese government's money to promote Beijing's
united-front strategy in Taiwan. The "Taipei Times" ran an
editorial stating that Taiwan is a nation where freedom of
speech is largely safeguarded, or the DPP administration
would not have received so much criticism. The editorial
called GIO's move a just one which "has nothing to do with
opposing press freedom." The "Taiwan News" also noted that
"even if the government's motivations are open to
examination, TVBS remains responsible for ensuring that its
ownership structure is legally valid."

======================================
Experts: GIO actions legal but foolish
======================================


8. (C) Telecommunications and broadcast legal expert June Su
agreed that the GIO had so far acted within its legal mandate
by requesting additional information on TVBS's ownership
structure. She agreed that Yao had shown bad judgment in
trying to pursue this issue at a time when TVBS was
conducting a series of investigative reports on alleged
corruption within the DPP, but supported GIO's concerns about
possible Chinese investment in Taiwan broadcasters. If TVBS
refused to comply with the GIO's lawful request, they would
be in violation of the law and subject to penalties, she
said. Well-placed media contacts have told us that the
legality of GIO's request in the public eye is undermined by
the fact that no mention of the ownership issue was made when
TVBS applied for renewal of its broadcasting license just
one month ago.


9. (C) Both Pan-Blue and Pan-Green lawmakers told AIT that
they consider the controversy to be clearly political,
although they disagree about who is directing the effort.
DPP Legislator CC Lin (Cho-shui) surmised that GIO Chief Yao
had independently made a foolish decision to try to rein in
TVBS in order to stop the constant stream of reports on
alleged DPP corruption before the December election. Lin
said Yao's action and subsequent statements threatening to
close TVBS had not only severely damaged the government's
credibility, but had also damaged the reputation of the DPP
and hampered the DPP's prospects in the coming election. But
PFP Legislator Hwang Yih-jiau disagreed, arguing that the
move against TVBS was part of a "good cop/bad cop" conspiracy
initiated by President Chen to improve his popularity before
the election. According to Hwang, Yao and Premier Hsieh are
cast in the bad cop (hei ren) role, demanding TVBS be closed
down for imagined infractions. This allows President Chen to
step in as the good cop (bai ren), promise TVBS will not be
shut down and bolster his abysmal public opinion ratings.


10. (C) Lin acknowledged that the TVBS ownership structure
appeared to be legal under the provisions of the satellite
broadcast law, but offered that the complete control of TVBS
by a foreign-based entity clearly violated the intent of the
law. Hwang agreed that TVBS had not broken any law and added
further that TVBS had no obligation to respond to GIO's
request for information. Both Hwang and Lin agreed that the
GIO, which will pass its broadcast regulatory role to the NCC
as soon as that body is officially established, should defer
any decision on the matter to the NCC. Since that was
unlikely, each predicted that there would be continued barbs
in the media, but that TVBS would ultimately be asked to do
no more than pay a fine and revise its license application to
note the change in ownership. Lin disagreed with those who
called this a crisis for Taiwan press freedom, suggesting
that it was mostly noise, and would not have a lasting effect
on the behavior of the media. Hwang added that in light of
President Chen's statement that the he would not support
closing TVBS, the PFP would not renew its call for public
demonstrations, but warned that the government was likely to
continue to subtly harass TVBS in the future.

=========================================
Comment: DPP running out of feet to shoot
=========================================


11. (C) The TVBS reports on DPP corruption have already
brought down a presidential advisor close to Premier Hsieh.
Although TVBS's ownership structure is a legitimate concern
of the government and TVBS did itself no favors by failing to
report its change in ownership, the legal issue is clearly a
tool GIO is using to try to rein in a media outlet that has
boosted its ratings by alleging corruption by officials close
to the center of the DPP. The move to clamp down on
reporting of the case, spearheaded by GIO Chief Yao, has
obviously backfired on the DPP this time, helping to turn an
important local corruption case into a national indictment of
DPP governance. It has also made TVBS talkshow "2100" the
hit of the season -- the election season that is -- in
Taiwan. Even long-time DPP supporters are critical of the
government's inept handling of this case. The DPP's image
has been further tarnished, which will do it no good in
upcoming elections. But both the news cycle and public
memory are short and, barring closure of TVBS, it is hard to
see how this incident will have any long-term effects on
Taiwan's political balance. End comment.
Keegan