Korean MBK sold taiwanese Gala TV to European private equity fund EQT

16 February 2011 22 h 58 min 7 comments

Private equity group EQT, which is one third owned by Swedish investment company Investor AB, said on Monday 14 February it had bought Taiwanese TV channel operator Gala TV. The TV operator was sold by the South Korean fund MBK which bought the company in 2008.

EQT said in a statement its Greater China II fund had bought the company (96,5% of the capital) with its chief executive, Lin Poa-Chuan, as co-investor (3,5%).

Details of the transaction were not disclosed but a source told Reuters last year that Gala would probably be worth less than T$10 billion ($341.4 million). For other experts, the deal size is expected at about NT$3 billion ($80 million), based on Gala TV’s 2007 EBITDA of around NT$660 million and a debt-to-EBITDA ratio of around four times.

one of the top five cable TV content providers in Taiwan 

Established in 1997, Gala Television Corporation (Chinese: 八大電視股份有限公司) is one of the top five cable TV content providers in Taiwan with four channels that are carried by all major cable operators. As part of the basic tier for service subscription for all cable TV systems, these channels are accessible by all households in Taiwan. 

GTV currently operates 4 commercial cable television channels:
• GTV One / CH 27 (Chinese: 八大第一台)
• GTV Variety Show / CH 28 (Chinese: 八大綜合台)
• GTV Drama / CH 41 (Chinese: 八大戲劇台)
• GTV Channel K (Chinese: 八大娛樂K台, in partnership with Seoul Broadcasting System) to provide Korean varitety shows and dramas in Taiwan.

GTV-Drama is the prime drama channel in Taiwan

GTV offers a mixture of in-house produced, commissioned, and acquired content. The Company has over the years produced and accumulated a library of many popular Chinese-language TV programs. This Chinese-language library has proved attractive for both domestic and to overseas viewers in places such as China and South East Asia. GTV has a strong market position in Taiwan with leading viewership shares. GTV-Drama is the prime drama channel in Taiwan while GTV-One and GTV-Variety are among the leaders in the variety genre.

“GTV has a strong market position with leading viewership shares and unique strengths in drama. We look forward to working together with GTV’s experienced management in developing the business further. EQT’s previous experiences with new media platforms and digital channels will also be leveraged to further develop GTV,” says Fredrik Åtting, Senior Partner of EQT Partners in Hong Kong, investment advisor to EQT Greater China II.

Overseas distribution of idol drama also holds strong prospects on the back of promising markets such as China and South East Asia where the demand for quality Chinese-language drama is high. Under the leadership of the current management team, together with the support of EQT, GTV aims to further expand its business and position itself as a leading Chinese language TV channel operator in the international arena

The Taiwanese economy as a whole shows strong development and the local cable TV advertising market grew by 26%, from NT$6.2 billion in 1H 2009 to NT$ 7.8 billion in 1H 2010. TV, and cable TV in particular, is the dominant advertising platform in Taiwan and has proven more resilient to adverse economic conditions than other, traditional platforms such as magazines and newspapers.

Competition with Sony 

In August 2010, reports first surfaced that Gala TV was on the auction block, with Japanese electronics giant Sony Corporation reportedly making an NT$6 billion ($188 million) bid for the asset.  Reports at the time noted that the pitch came from Sony’s web division So-Net, which aimed to broadcast Gala TV’s content portfolio on its acTVila platform if the deal was successful. So-net is partially owned by Taiwanese leading telecom carrier, Chunghwa telecom. Finally MBK chose EQT.

In a statement to press, Fredrik Åtting, a senior partner at EQT Asia said, “EQT has a lot of experience from Europe with new media platforms and digital channels.  We have in total invested in four different cable system operators in Europe, [and hope] to bring that knowledge to help and support the management of Gala TV.”

MBK exit from taiwan cable

MBK Partners first invested in the company in December 2008 out of its MBK Partners I Fund.  the sale of GTV was part of the MBK’s decision to sell all its Taiwan cable portfolio. In 2010, tThe Korean firm has completed the largest Asian private equity exit of 2010 when it sold its 60% stake in cable perator China Network Systems (CNS) to Want Want China Holdings for $2.4 billion, against other bidders suc as Bain Capital, Permira, Providence Equity Partners and Macquarie Group. The exit came three years after MBK originally bought CNS for $1.5 billion.

About EQT
EQT is the leading private equity group in Northern Europe with more than EUR 13 billion in raised capital and multiple investment strategies. Together with a superior network of Industrial Advisors, EQT implements its business concept by acquiring or financing good medium-sized to large companies in Northern and Eastern Europe, Asia and the United States, developing them into leading companies. Since inception, EQT has invested EUR 9.7 billion in more than 85 companies and exited more than 40. EQT-owned companies have more than 500,000 employees. EQT Greater China makes control or co-control investments in high-quality market leading, medium-sized companies in attractive industries in Asia with a potential for top-line growth.

SOURCES: GTV, EQT, MBK (16/02/2011)

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