* Deal was already bogged down in dense regulatory process

* Regulator says has had over 300 meetings on matter

* Fubon could be alternative buyer -analysts

By Faith Hung

TAIPEI, April 6 (Reuters) - Private equity fund MBK Partners' hopes for a quick conclusion to the $2.4 billion sale of its Taiwan cable TV business have been dashed after the deal descended into controversy over pro-China political comments by the buyer's chairman.

MBK agreed to sell China Network Systems (CNS) to media and manufacturing conglomerate Want Want China Holdings in October 2010, looking to offload a company it had bought in 2007 for $1.5 billion.

Already bogged down in Taiwan's notoriously labyrinthine regulatory processes, the deal hit a fresh obstacle after Want Want Chairman Tsai Yen-ming told the Washington Post in January that he wanted China and Taiwan to unify quickly.

The remark and others on China raised the hackles of regulators acutely sensitive to mainland influence in democratic Taiwan's media, and triggered a rash of "please explain" demands and requests for proof of editorial independence at Want Want.

That has left both MBK and the buyer frustrated and ramped up the possibility of the deal collapsing.

"MBK is evaluating all possibilities. It is urging the NCC (National Communications Commission) to make a ruling as soon as possible, no matter which way," said a source close to the private equity fund, who requested anonymity due to the sensitivity of the matter.

"MBK needs leeway either to withdraw the sale or find another buyer. It believes the NCC has all the information it needs to make a ruling. At this point, only God knows what else it needs," said the source.

The National Communications Commission (NCC) regulates the Taiwan's broadcast and media industry.

Taiwan bans mainland entities from participating or investing in the media industry, wary of China's stated aim of taking back the self-ruled island it regards as a renegade province.

In the interview, Tsai was quoted as saying he could not wait to see Taiwan and China unified.

According to the paper, he also said that after watching the famous footage of a lone man standing in front of a tank during the 1989 Tiananmen Square protests and not being shot, he realised "that not that many people could have died" in the protests.

BOYCOTT CALL

Want Want gets about 90 percent of its revenues from China, where it is one of the biggest rice cake makers. It is also one of Taiwan's top TV and print media groups, owning the China Times daily newspaper and the CtiTV cable station.

It has faced increased scrutiny over its strong China connections and there were public calls for a boycott of the China Times after Tsai's interview.

But Want Want is also frustrated over the stalled deal, according to Chao Yu-Pei, special assistant to Tsai Shao-chung, the man in charge of the CNS buy and the son of Tsai Yen-ming.

"Everyone has freedom of speech. How can the NCC not approve the deal because of his comments? It is against Taiwan's constitution," he said.

"The Washington Post took only part of his comments and interpreted them in the wrong way," Chao added.

Taiwanese media in February quoted the journalist who conducted the interview, Andrew Higgins, as saying the Post stood by the story and that the comments were not taken out of context.

A source close to the NCC told Reuters it had all the information it needed.

"The commissioners have not been able to set their tone yet," said the source, asking for anonymity as the subject is sensitive.

"They are keen to grasp every aspect ... to be able to give clear explanations to society and the parties involved in future," the source added.

K.C. Kung, greater China chief at Seoul-based MBK, declined comment.

Chen Kuo-long, spokesman for the NCC, said the deal is still under review and that more than 300 meetings have been held to discuss it.

If the deal fell through, interested buyers may include Fubon Financial, analysts said. Fubon's controlling shareholders, the Tsai family, bought cable TV firm Kbro from Carlyle Group last year.

Regardless of the issue of Tsai's reported comments, the transaction was always in for a tough time, as Taiwan authorities regard private equity firms as focusing on quick profits rather than the long-term health and stability of the firms they invest in.

Carlyle had to wait for more than a year to close the Kbro sale after having rejigged the deal to get around regulators' repeated objections.

• A Permanent Economic Emergency