ATV faces tough bargaining in Guangdong advertising talks

Financial terms and bargaining positions have emerged in two critical sets of negotiations between Hong Kong broadcasters and the Guangdong Administration of Radio, Film and Television (GDARFT).

At stake is a share of Guangdong's lucrative television advertising market - which is estimated to be worth as much as 3.5 billion yuan (about HK$3.28 billion) a year.

In a recently concluded agreement, GDARFT has given relatively generous terms on revenue-sharing to Phoenix TV. The regulator, however, is driving a much harder bargain in talks with Asia Television (ATV).

Industry sources said the regulator's carefully calculated negotiating strategy was aimed at giving it a precedent as possible talks with TVB, Hong Kong's dominant broadcaster and also the most popular channel in the Pearl River Delta.

Phoenix chairman and chief executive Liu Changle told the South China Morning Post his company would be allowed to keep 70 per cent of all Guangdong advertising revenues raised through a recently established joint venture with GDARFT's Guangdong Television Broadcasting Development Centre.

Industry sources estimate that the agreement could generate an additional 50 million yuan in Guangdong advertising revenues for Phoenix this year, as local cable operators will no longer be allowed to edit - or 'splice' - in their advertising over Phoenix's.