L.L. Wang, chairman of the Eastern Group, recently set an ambitious goal for his enterprise: to become the world's largest Chinese-language TV media group by 2007, with revenues of over NT$77.6 billion (US$2.2 billion at NT$35:US$1).

To meet this goal the group's affiliates--Eastern TV, Eastern Multimedia, and the Eastern Home Shopping Network--will have to step up the pace of their ongoing expansion. Eastern TV has already acquired other local TV channels, including Super TV, and is looking for opportunities to team up with TV suppliers in other countries, including mainland China.

Eastern TV recently teamed up with the Sun Media Group of mainland China, and Wang says that it has been in talks about the acquisition of Taiwan's China TV since last year through Quan Lie, chairman of ING Baring's fund-tracking Asia-Pacific media, which is a major China TV shareholder

"Integration is now the trend in the media industry," Wang comments. "This is particularly true in Taiwan, where broadcast-TV operators are losing business and cable-TV operators are growing rapidly."

The chairman emphasizes that the tie-up with Sun Media focuses on programming, not capital investment. "We sell Sun Media drama series, variety shows, and daily-life information, as well as programs from Japan's JET channel," he explains. Eastern also sells programs to other mainland Chinese TV operators.



The mainland is crucial to Eastern's expansion plans, and the company is also applying to the authorities there for permission to offer satellite programs to mainland operators. So far, though, no approvals have come through.


First in Taiwan


Wang reports that Eastern TV has emerged as Taiwan's No. 1 cable-TV operator over the past eight years, with a total of eight channels. Its domestic advertising revenues have increased by 40% annually; if this pace continues, advertising will bring in NT$3.7 billion to the company in 2007. "However," Wang cautions, "the domestic commercial market is quite limited, and foreign companies control most commercial dealerships."

Over the next eight years, the company will boost its development effort in overseas areas with large Chinese populations. It has already signed up three million subscribers outside of Taiwan, and its programming is now seen in Hong Kong, Macau, North America, the Philippines, Indonesia, New Zealand, and Australia. The company projects 13.5 million overseas subscribers within six years. Overseas advertising revenues are projected to reach NT$600 million (US$17 million) this year.

Eastern TV forecasts revenue growth of 30% this year, and plans to go public on Taiwan's over-the-counter market in 2004.

Eastern Multimedia concentrates on broadband services and the operation of local cable-service networks, with 13 cable-network providers in Taiwan and a target of 150,000 subscribers for is pay-TV service by the end of the year.

The company wants to launch an initial public offering (IPO) on Hong Kong's stock market (with preparatory help by Credit Suisse First Boston) by the end of the year and engage in competition with the Hong Kong network provider I-Cable. The latter has 600,000 subscribers, compared with 900,000 for Eastern Multimedia. "I hope that the competition between us will be like that between the world's top two IC foundry providers (TSMC and UMC, both Taiwan firms), and that Eastern Multimedia will become the TSMC of the cable industry," Wang says.


Getting Ready to List


To prepare for the IPO, the company booked operating losses of NT$2.7 billion (US$77 million) last year. The reason for this, the chairman explains, is to "make our finances transparent for investors, so that they can fully understand us. Actually, most of that loss was unrealized, so we did not in fact lose money last year."

Eastern Multimedia's major involvement in the broadband business is an NT$1.8 billion (US$51 million) investment in Eastern Broadband Telecommunication Co., which is now laying fiber-optic cables along the parent company's cable networks and setting up last-mile connections. This will enable Eastern Multimedia to charge Eastern Broadband NT$350 million (US$10 million) a year for the use of the former's networks.

The two companies are planning the joint promotion of a service package that bundles together all broadband services, including cable TV, ADSL (asymmetric digital subscriber line), and international telephone services. This will eliminate the need for subscribers to install separate set-top boxes and ADSL modems.

The impending digitization of TV broadcasting in Taiwan will bring more opportunities to Eastern Home Shopping and other shopping-channel operators. After a third channel is added next year, the company plans to cooperate with financial-holding companies to introduce shopping channels that sell financial products, and with travel-product channels to market tourism products.

Other plans include the purchase of some 10,000 pings (33,000 square yards) of land in the Taipei district of Peitou, at an anticipated cost of NT$3 billion (US$86 million), for the construction of a new group headquarters and media park. All group affiliates will move into the new offices, and the Taiwan branches of multinational media companies will be invited to move into the park.

Of the group's projected total revenues of N$34.4 billion (US$1 billion) this year, up from NT$21 billion or US$600 million in 2002, Eastern TV is expected to contribute N$5.5 billion (US$160 million), Eastern Multimedia NT$8.9 billion (US$250 million), and Eastern Home Shopping NT$20 billion (US$570 million). The realization of these revenue figures, Wang notes, "will be the first step toward achievement of our 2007 goal."