US embassy cable - 05TAIPEI4482

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 
 
SIPDIS 
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 politicians 
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