The amendments (the “Amendments”) to the Radio and Television Act (RTA), the Satellite Broadcasting Act (SBA), and the Cable Radio and Television Act (CRTA), were passed by Legislative Yuan on 18 December 2015, were promulgated by the President on 6 January 2016, and took effect starting from 8 January 2016. As the RTA, SBA and CRTA have been amended substantially, which would have a significant impact on the relevant industries, set forth below please find our summaries of the major changes of the Amendments:
1. The major changes of the Amendments held in common
(1) The major changes shared between the RTA and the SBA
- Adding the provisions with respect to the sponsorship and the placement marketing: In response to market demand, the National Communications Commission ("NCC") promulgated temporary guidelines for the sponsorship and the placement marketing of television programs without legislative authorization. The Amendments require specifically that the radio and television business and the satellite broadcasting business shall clearly disclose the information concerning the sponsors before and after broadcasting programs when accepting the sponsorship. With the premise that the interests of audience shall not be affected, the information concerning the sponsors may appear in sports programs and artistic programs (Article 34-2 of the RTA, and Article 32 of the SBA). In addition, the NCC is authorized to establish guidelines governing the categories of programs which are allowed for the placement marketing, the identification and separation between programs and advertisements inserted therein, the methods, restraints and other matters required for disclosing the information concerning the placing businesses, and the sponsors (Article 34-3 of the RTA, and Article 33 of the SBA).
It is worth noting that the amended SBA requires that the satellite broadcasting business shall not broadcast any programs containing placement marketing placed by the government, and shall not be commissioned by the government to broadcast any programs which are invested, produced, sponsored or subsidized by the government without disclosure of relevant information; news related programs and children’s programs are not allowed for placement marketing; while adopting placement marketing, the satellite broadcasting business shall not deliberately affect the editing content of programs, directly encourage viewers to purchase specific commodities or services, or exaggerate the effect of a product, and shall clearly disclose the information of the placing businesses before and after programs (Article 31 of the SBA). Although the same provisions were amended in the draft amendment to the RTA, such provisions were removed in the end. Therefore, the requirements concerning the sponsorship and the placement marketing in the RTA and SBA are currently not the same.
- The definition of the term “program” has been clarified: By referring to the laws of the EU and the US, the definition of “program” under the Amendments is redefined as “an independent unit of content consisting of a series of images, sounds, and relevant text, and broadcasted in sequence and at an arranged time," which would only be applicable to linear programs. In other words, non-linear programs, such as video on demand (VOD), would not be deemed as "programs," as defined in the new RTA and SBA.
(2) The major changes shared between the SBA and the CRTA
- Having shopping channels to be regulated by law: In the past, the NCC restricted the number of shopping channels without legislative authorization. The amended SBA specifically prescribes that the number of shopping channels broadcasted by a direct satellite broadcasting services operator shall be less than 10% of the total amount of channels it broadcasts. Likewise, the amended CRTA authorizes the NCC to limit the number of shopping channels broadcasted by cable radio and/or television system operators (the “SO”) in the cable radio and television system. In addition, the SO shall obtain a "other type of channel program supply business license" if it intends to own its shopping channel, and shall not charge its digital CATV subscribers for any shopping channel broadcasted on its system (Article 24 of the SBA, and Article 38 of the CRTA).
- It is worth noting that according to one of the amendment versions proposed by some legislators, which is now incorporated into the finalized version, its reason indicates that to facilitate the implementation of digital CATV, the number of shopping channels would be regulated only for those being placed in the basic channels. There is no necessity to regulate the number of shopping channels which are not placed in basic channels. Therefore, it can be expected that the NCC would promulgate the guidelines following this direction.
2. The major changes of the RTA
In order to develop local cultural industries, aside from the provisions stipulating that locally produced programs shall not be less than 70% of the total radio/television programs, provisions have been added to the Amendments requiring locally produced drama programs broadcasted in the main time slots to not be less than 50% of the total drama programs, and authorize the NCC to promulgate regulations governing the determination and categories of locally produced programs, the definition of the main time slot and other matters required (Article 19 of the RTA).
3. The major changes of the CRTA
- In the past, the method of determining the indirect foreign ownership of the CATV SO was not clear in the old CRTA, causing disputes and the NCC's decision to be challenged. The Amendments refer to the provisions of the Telecommunications Act and clearly provide that the indirect foreign ownership shall be calculated in accordance with the percentage of the shares held by a domestic legal entity in a SO times the percentage of the shares or equity interests held by foreign nationals in that domestic legal entity (Article 9 of the CRTA).
- The Amendments add the matters required to be included in the business plan as follows: the implementation plan of the programs spreading domestic cultures, the plans to set up the cable radio and television system by itself, to rent the transmission equipment owned by Type I telecommunications enterprises or other SOs, and to set up the Head-end backup mechanism, and the list and relevant information of shareholders or subscribers holding more than 10% of the company’s issued shares. The existing SOs shall apply with the NCC for changing the business plan and adding such matters within one year after the Amendments took effect (Article 11 of the CRTA). It is worth noting that Article 12 of the amended CRTA requires that the NCC shall reject such application if the eligibility of directors, supervisors, managers and shareholders holding more than 10% of the company’s issued shares is deemed by the NCC through public hearing harmful to facilitate market competition, consumer interest and other public interests. Such provisions will result in more uncertainty with regard to the transactions about SOs.
- The Amendments specifically provide that the foreign investors shall not affect the national security, impair or hinder the sound development of industry, and interfere or restrain the fair competition when applying to invest in the SOs. Also, when reviewing, the NCC shall require applicants to explain and submit supporting documents with respect to: (i) the openness of public access; (ii) the plurality of content; (iii) the protection and feedback of the interests of consumers; (iv) the improvement in operating efficiency; (v) the impact on the market related to the media; (vi) other matters deemed by the competent authority to benefit the public interests (Article 15 of the CRTA).
- For accelerating the digital CATV, the Amendments provide that when entering the market or expanding its service area, SOs shall provide the cable radio and television system service by digitizing techniques; SOs shall not apply with the NCC for examination in order to commence their business or expand its service area until the scope of the system installing service has covered no less than 15% of the total number of households in such service area; the scope of system installing service shall cover no less than 50% of the total number of households in such service area within 3 years; otherwise, the NCC will impose administrative sanctions on the SO (Article 7 and Article 20 of the CRTA).
- SOs shall submit the phased implementation plans for the digital CATV to the NCC within 3 months from the effective date of the Amendments, and shall consummate the digitization of cable radio and television system prior to first-time applying with the NCC for renewing the operating license after the effective date of the Amendments; otherwise, the NCC will impose administrative sanctions on the SO or reject such application (Article 48 and Article 64 of the CRTA).
4. The major changes of the SBA
- In order to strengthen the media self-regulation and the mechanism of accountability, the Amendments require that satellite broadcasting program suppliers (the "PS") shall set up the internal control mechanism and the system of program editing and reviewing; the PS producing and broadcasting the current affairs programs or designated by the NCC shall set up the self-regulation mechanism which accepts independently the complaints by audience with respect to the correctness, equilibrium and taste of broadcasting content; the PS shall classify and broadcast programs in consideration of their content, and implement the mechanism of accountability (Article 7, Article 8, Article 22 and Article 28 of the SBA).
- For developing the production of domestic programs, the Amendments require that the PS shall comply with the provisions with respect to the percentage of locally produced programs when producing programs, and take the plurality of content, human dignity, social responsibility and the protection of domestic culture into consideration when planning programs. The existing PS shall apply with the NCC for changing the business plan within 1 year from the effective date of the Amendments (Article 8 of the SBA).
In summary, the Amendments have significantly revised the current provisions of the three broadcast laws. Above all, as to the operation and transactions regarding SOs, the new law stipulates the controversial factors affecting the examination. It is worth observing how the NCC specifically interprets such general provisions by case in the future.