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Media buyouts have Taiwan and Hong Kong wary of pro-China spin

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Copies of the South China Morning Post sit on a newsstand in Hong Kong in November.   © Reuters

TAIPEI/HONG KONG Acquisition bids for media assets in Taiwan and Hong Kong are raising fears about Beijing's efforts to control the press in both markets and spin coverage in its favor.

     The suitors are known for their extensive mainland business interests. One of them is U.S. film producer Dan Mintz, often referred to as "Mr. China" in Hollywood. He announced in November his intention to purchase a controlling stake in Taiwanese TV network Eastern Broadcasting Co. from American private equity firm Carlyle Group.

     Mintz is the chief executive of the U.S. arm of leading Chinese TV and film company DMG Entertainment. The company is chaired by Peter Xiao Wenge, a businessman whose father was reportedly a senior official in the People's Liberation Army.

     Meanwhile, Jack Ma Yun, the founder and executive chairman of Chinese e-commerce empire Alibaba Group Holding, is rumored to be poised to acquire a stake in the publisher of Hong Kong's South China Morning Post newspaper from Chinese-Malaysian mogul Robert Kuok.

     Kuang Chung-hsiang, an expert on mass media at National Chung Cheng University in southern Taiwan, said entrepreneurs with mainland investments may try to gain control of Taiwanese and Hong Kong media outlets as a way to maintain smooth relations with Chinese authorities. The "SCMP actually has been in the control of a pro-Beijing businessman," Kuang said. "Jack Ma, meanwhile, is also a merchant, and merchants will satisfy the government's political needs at critical junctures to ensure their own interests."

     Looking to Taiwan, which Beijing considers part of China, Kuang added: "Some still fear that China may want to gain political influence ... and purchasing media outlets will surely allow one to make an impact on freedom of speech."

     Taiwanese officials have said they will carefully review Mintz's application to take control of EBC, noting that Chinese funds are not allowed to invest in local media companies.

     Mintz is best known for his success in co-producing "Iron Man 3" with Walt Disney's Marvel. The movie was the top-grossing foreign film in China in 2013.   

     A person familiar with the EBC deal told the Nikkei Asian Review that Mintz is paying $600 million out of his own pocket to buy a 61% stake from the Carlyle Group, pending approval from Taiwan's government. That gives the company a valuation of $983 million. Mintz, the person said, aims to secure full control of EBC and is in talks with minority shareholders about purchasing their stakes.

HISTORY OF CONFLICT   Reports of a possible Alibaba takeover of 112-year-old SCMP surfaced after the newspaper's former editor-in-chief, Wang Xiangwei, handed the reins to his deputy, Tammy Tam, in early November.

     The Hong Kong newspaper, one of the most influential English-language publications in Asia, has taken flak for its apparent self-censorship and alignment with the Chinese Communist Party since Kuok bought a controlling stake from Australian media magnate Rupert Murdoch's News Corp. in 1993.   

     Kuok has significant business interests in China and tends to favor top editors who refrain from criticizing the government in Beijing. Wang, a former member of the provincial level Chinese People's Political Consultative Conference -- China's advisory body to the government -- was the paper's 10th editor-in-chief over the past 14 years and the first mainland-born journalist to hold the position.

     During Wang's four-year reign, the paper came under fire for curtailing coverage of a mainland dissident's death. It saw a mass exodus of journalists. And it got into rows with Alibaba's Ma.

     The most notable conflict between the two erupted in 2013. The paper reported that in an interview, Ma said late Chinese leader Deng Xiaoping's order to crack down on pro-democracy protesters in Tiananmen Square in 1989 was the "most correct decision" at the time. Ma complained that the publication misquoted him.

     The SCMP Group on Nov. 25 revealed that it is holding talks on a possible sale, but both the paper and Ma declined to confirm that the e-commerce tycoon is an interested party.

     Clement So York-kee, a journalism scholar at the Chinese University of Hong Kong, said a deal would be no surprise, since Alibaba has the money and needs content on its online platforms. But he added that the bid raises concerns about the Chinese territory's media sector.

     "Media ownership is closely linked with political and ideological interests in society," So said. "It's about influence over public opinion. It's an intangible asset."

     Still, So speculated it is unlikely the paper will become a mouthpiece for Beijing, since it understands that to remain credible, it cannot simply spout Communist propaganda.

"TEXTBOOK EXAMPLE"   The SCMP and EBC deals would not be the first to give Beijing indirect influence over the press beyond the mainland.

     Taiwan-born, pro-Beijing businessman Tsai Eng-meng, who owns food conglomerate Want Want Group, in 2008 bought the island's China Times Group including a major newspaper and two TV networks, apparently to promote his pro-unification views. Tsai's group generates most of its revenue in China, mainly through Hong Kong-listed subsidiary Want Want China.

     Tsai stoked further controversy in early 2012 when he told The Washington Post that a massacre did not happen at the Tiananmen protests because "not that many people could have died."

     "China has been trying to manage press coverage in Taiwan and control ownership of Taiwanese media outlets with its economic prowess by propelling pro-Beijing magnates to acquire media companies," said Mattel Hsu, an adjunct research associate at Melbourne-based Monash University. "Want Want is a textbook example."

     Explaining the implications for coverage, Hsu said: "Beijing could force Taiwanese media tycoons with significant mainland investments or a keen desire to win business in China to eschew criticism of the Chinese government. Those tycoon types are mainly thinking about opportunities in China, and neither Taiwan's freedom of the press nor its political self-determination is a consideration for them."

Nikkei staff writer Cheng Ting-fang in Taipei contributed to this report.

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