This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 003651 
 
SIPDIS 
 
STATE PASS AIT/W 
 
E.O. 12958: DECL: 10/12/2014 
TAGS: PGOV ECON TW
SUBJECT: TWO VIEWS OF TAIWAN'S MEDIA AND THEIR POLITICAL 
USES 
 
Classified By: AIT Director Douglas Paal; Reasons: 1.4 (B/D) 
 
¶1.  (C) Summary. A recent report authored by the KMT's 
National Policy Foundation (NPF) alleges that the Democratic 
Progressive Party (DPP), via the Government Information 
Office (GIO), is manipulating Taiwan's media and suppressing 
negative press reporting through its authority to regulate 
the media licensing process.  The report also claims that 
Taiwan's media outlets are reluctant to go too far in 
criticizing the government because they rely on advertising 
revenue from government-owned banks and enterprises.  GIO 
officials maintain that these claims by the NPF are baseless 
and that the GIO operates within the laws of the 1976 
Broadcasting and Television Act.  The GIO asserts media 
reform is long overdue and that reform efforts are targeting 
all underground stations and not just those that are pro-DPP. 
 They also added that the GIO's advertising budget 
compromises only about 2 percent of Taiwan's entire 
advertising budget.  End summary. 
 
GIO Implementing Media Reforms 
------------------------------ 
 
¶2.  (C) Taiwan's GIO has embarked on a broadcasting 
reorganization plan that aims to restructure public-owned 
radio networks and reorganize the distribution of 
frequencies.  The plan also calls for the easing of the 
process for "underground radio" stations to register legally 
with the government.  The opposition has criticized the plan 
because it will require some KMT controlled broadcasting 
companies, particularly the Broadcasting Corporation of China 
(BCC), to return some of its existing frequencies to the 
government for redistribution in the media market. 
Legislation was also passed last year that bars the 
government and political parties from owning or running media 
organizations and calls for the creation of a National 
Communications Commission (NCC) to replace the GIO in 
overseeing the operations of the broadcast media.  The NCC is 
expected to begin operations in 2005. 
 
KMT Unhappy with Reforms 
------------------------ 
 
¶3.  (C) KMT supporters argue that the DPP, under the auspices 
of the GIO, is interfering with the media and undermining the 
freedom of the press in Taiwan.  Professor of Journalism 
Huang-fu Ho-wang, one of the contributors to the NPF report, 
met with AIT to articulate his concerns regarding perceived 
DPP abuses against KMT controlled media outlets and the 
general state of the press in Taiwan.  Huang-fu lamented that 
never has the GIO been so powerful and that it is abusing its 
power in the radio and television station licensing process. 
As a member of the GIO licensing committee for 6 years in the 
1990s, Huang-fu stated he is fully aware of the license 
renewal process and that the GIO is operating illegally in 
terms of how it is taking back radio station frequencies from 
the BCC.  He alleged that the DPP is trying to retaliate 
against media outlets run by the KMT and is only seeking to 
help those unlicensed radio stations become legitimate that 
helped President Chen during the election campaign. 
 
GIO Claims Actions are Legal 
---------------------------- 
 
¶4.  (C) GIO officials maintained that the GIO operates 
according to the Broadcasting and Television Act of 1976, 
which was passed under the KMT.  AIT met with Tseng Yi-hung, 
the GIO's Deputy Director of Broadcasting Affairs, and 
Chi-shen Ho from the GIO's Department of Radio and Television 
Affairs, to discuss the NPF accusations.  Under the act of 
1976, the GIO is authorized to renew licenses for local 
television and radio stations every two years and according 
to Tseng, the GIO has never in its history revoked the 
license of any radio or television station.  Tseng pointed 
out that the GIO has been planning to promote media reform 
for a long time and that this year was the optimal time 
because the GIO is currently reviewing station licenses.  The 
BCC has the largest number of frequencies in Taiwan, and had 
agreed in 1992 (under the KMT) to return 14 frequencies that 
had been previously used to block radio broadcasting from 
mainland China.  Tseng added that the BCC already had agreed 
to give up these frequencies several years ago and even after 
the reforms, they will still be the largest radio network in 
Taiwan.  Despite the 1992 agreement, the KMT has complained 
about the manner in which the GIO is forcing the BCC to sell 
the frequencies and the requirement that the frequencies 
cannot be sold to a foreign investor, the result of which 
makes the properties' value significantly reduced. 
 
¶5.  (C) Concerning the issue of streamlining the licensing 
process for underground stations, Tseng noted that these 
underground stations have been a problem for several years 
and that they do not pay taxes and are unregulated.  Thus, 
the GIO decided it would be in Taiwan's best interest to find 
a way to legalize these stations.  In response to AIT 
questions about the DPP loyalty of these stations, Tseng said 
that these illegal stations are located throughout Taiwan and 
not just in the DPP-leaning south.  Tseng said that it is 
simply untrue that their efforts are benefiting pro-DPP 
stations because the new process will allow all underground 
stations, including pro-KMT stations, to become legal. 
(Note: We have no information available on the actual 
locations of these underground stations to confirm if the 
majority are in the south as claimed by the NPF.  End note). 
 
 
Media Market too Saturated? 
--------------------------- 
 
¶6.  (C) Huang-fu also charged that Taiwan's relatively small 
media market is unable to support its large broadcasting and 
print media industry.  He argued that because Taiwan's media 
outlets are so numerous, there is intense competition for 
advertising revenue.  As such, media companies are reluctant 
to go too far in criticizing the government because stations 
and newspapers are reliant on government funds for 
advertising revenue and government banks to provide loans. 
Huang-fu said this situation allows the government to use its 
political influence and financial leverage to interfere with 
media reporting to ensure positive coverage.  He commented on 
the case of the China Times, where according to Huang-fu, 
since legal actions were taken against one of its reporters, 
the paper had become less critical of the government. 
Huang-fu is certain that the paper is under financial 
pressure after it acquired loans from banks, which he claims 
are under the control of the DPP.  (Note: In 2001, the China 
Times laid off personnel.  We have no information available 
to confirm the paper's current financial situation.  However, 
the paper's circulation has dropped from number one to number 
three over the past two years.  End note). 
 
¶7.  (C) Tseng agreed that Taiwan's media market is 
substantial considering the small size of the island.  But he 
commented that this is an example of how Taiwan's press is 
open and represents the full spectrum of views within 
society.  In terms of government influence in the market 
through advertising, Tseng told AIT the GIO's advertising 
budget totaled about $30 million (NT$1 billion).  The budget 
is focused on publishing new government policies or 
administrative measures--like SARS awareness last year. 
According to Tseng, this budget accounts for only 4 percent 
of the television and radio advertising market of $735-880 
million (NT$25-30 billion) and less than 2 percent of the 
entire media advertising market of $1.75 billion (NT$60 
billion) in Taiwan. 
 
DPP Using Other Tools to Influence? 
---------------------------------- 
 
¶8.  (C) Huang-fu also asserted that the DPP is tightening 
control of the media through other organizations such as the 
Taiwan Advertiser's Association (TAA) and the Broadcasting 
Development Fund (BDF).  Huang-fu characterized these 
organizations as political arms of the DPP which are being 
used to influence the media.  The TAA is composed of 33 
private corporations, which formed the organization in 2000, 
to encourage quality media programs and accurate reporting. 
Huang-fu noted that most of the corporations who are members 
of the TAA donated heavily to the DPP during the recent 
election campaign.  The BDF is financed from the tax revenue 
of radio and TV stations and designed to promote television 
and radio station interests.  Huang-fu said that the 
organization merely serves as a DPP pawn used to reward 
pro-DPP station owners with cash. 
 
¶9.  (C) Tseng pointed out that the TAA is a private 
organization with a broad goal of improving local television 
and radio programs.  The government has no influence who 
joins, and any corporation is eligible to participate.  Tseng 
said many of the member corporations are not involved in the 
TAA's decision making process and do not always agree with 
the TAA's recommendations.  As far as the BDF is concerned, 
Tseng noted the BDF has seen its revenues drop from about $15 
 
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million (NT$500 million) in 2002 to $300,000 (NT$10 million) 
in 2003 due to Taiwan's economic slowdown.  He claimed that 
the BDF has little influence or ability to change government 
policies and does not play a significant role in influencing 
actual programming. 
 
Final Thoughts 
-------------- 
 
¶10.  (C) Tseng summed up the government's position by saying 
the GIO is merely trying to make much needed reforms to 
Taiwan's media industry and denied that the GIO is abusing 
its power.  Doing so would raise criticism not only 
lawmakers, but also from the public at large since the media 
business is so transparent.  According to Tseng, if the GIO 
were really trampling the free press on behalf of the DPP, 
all of Taiwan and the world would be able to see it.  Tseng 
also said that media reform is a controversial task and not 
everyone is going to be happy.  He speculated that many in 
the KMT are likely unhappy because these reforms are being 
carried out as quickly as possible.  Huang-fu's final remarks 
were centered on that he is not a KMT member, but concerned 
for all the people in Taiwan.  He wanted to emphasize that 
everything in the NPF report that he and his colleagues used 
was publicly available.  This was not a partisan witch-hunt 
comprised of made up events designed to criticize the DPP. 
Huang-fu said that he and his colleagues only wanted to show 
the public what was happening to the free press in Taiwan. 
 
Comment: Lots of Smoke 
---------------------- 
 
¶11. (C) The DPP has used EY advertising funds for political 
ends in the past, most notably during the 2004 presidential 
election when EY-sponsored ads were indistinguishable from 
party campaign commercials.  Proof of more insidious media 
manipulation, however, is harder to come by. In a report 
released in October, Taiwan was ranked 60th among 167 
countries and areas for press freedom by the Reporters 
without Borders organization. There is no doubt that the 
Taiwan media market is saturated and in dire need of a major 
shake-out.  The weak financial state of media outlets makes 
them vulnerable to political manipulations from both sides, 
although the government clearly has the greater variety of 
tools.  While depoliticization of the media has been a DPP 
goal for much of the party's existence, the current 
polarization of Taiwan's political spectrum makes it unlikely 
that any action by a DPP government on media reform will be 
really balanced fairly between Green and Blue broadcasters or 
be perceived as fair and non-biased. 
PAAL