Revise pay TV proposals

PUBLISHED : Thursday, 14 January, 1993, 12:00am
UPDATED : Thursday, 14 January, 1993, 12:00am

THE Government's policy on pay TV is about to take legislative form. Part of the proposals offer compensation to ATV and TVB for the competition they will face from Wharf's network which is due to start operations by October 1993.


One of the proposals would extend the permitted amount of advertising on ATV and TVB, while another reduces the ceiling of royalty payments made to the Government from 12 per cent to 10 per cent. I think this policy is mistaken. The Government levies royalties on the advertising revenues of ATV and TVB, so by encouraging more advertising while at the same time reducing the royalty percentage the Government is not risking much in the way of lost revenue.


However, studies in other countries have indicated that advertising is generally regarded as a disutility, as lowering audience appreciation of the media. Less advertising, not more, is desirable from an audience perspective.


The alternative approach would be to reduce royalty payments further. This would reduce the Government's general revenue, but a royalty payment is not supposed to be levied as a general revenue raiser. Royalties are payments in respect of the exclusive benefits ATV and TVB derive from using public airwaves for broadcasting, but the other side of the coin is that the community benefits from the free-to-air broadcasting services.


If the Government is concerned that pay TV systems (cable/microwave and, in three years' time, satellite) will threaten the viability of free-to-air services, then the critical question is: how much public revenue (royalties) should be foregone to protect the community interest? The current proposals have the wrong priorities and the quality of broadcasting services will suffer as a result.


Dr JOHN URE Research Associate Centre of Asian Studies University of Hongkong

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