Phoenix TV expects profit soon despite competition
A heftier than expected $72 million loss also fails to deter mainland broadcaster
Phoenix Satellite Television Holdings believes it can turn a profit in its coming financial year despite rising competition on the mainland and a full-year loss which was wide of expectations.
Phoenix, listed on the Growth Enterprise Market, yesterday said it lost $72.22 million in the year to June, down from $199.71 million previously. The result was worse than the $56.37 million 13 analysts polled by Thomson First Call had expected the company to lose.
Phoenix shares fell one cent to 84 cents before the results report.
Chief executive Liu Changle said he was confident it would perform better 'with a good chance of breaking even and beginning to generate a profit' in the new year.
Turnover last year rose 3.6 per cent to $709.97 million but sales at its flagship Chinese Channel declined from $618.46 million to $616.44 million.
Sun Hung Kai Research analyst Florence Cheung said Phoenix faced intensifying competition for advertising revenue with other mainland broadcasters. She said programming - mostly bought from other television firms - offered no niche content compared with its rivals.
'Phoenix TV is not only competing with mainland broadcasters but also Hong Kong companies,' she said.
In Guangzhou, Phoenix had a 2 to 3 per cent peak-time rating while TVB and ATV had more than 60 per cent combined.
Revenue at Phoenix's InfoNews channel - granted nationwide landing rights in January - rose 17.7 per cent to $17.88 million.
Ms Cheung said the channel could bring Phoenix closer to breakeven but it would compete head to head for advertising revenue and viewers with the 24-hour news channel recently launched by China Central Television.
The Hong Kong-based broadcaster had stood out in its coverage of the September 11 terrorist attacks two years ago, going live within minutes of the strikes, while CCTV stumbled by waiting hours to get approval before showing footage of the attacks.
But now CCTV has grown savvier, using the United States war against Iraq to gain viewers with round-the-clock coverage and live feeds.
'InfoNews has been a considerable part of Phoenix's operating expenses, and once InfoNews has an established and documented place in the Chinese market it will be able to generate considerable advertising revenue,' Mr Liu said.
'This should lead to a fundamental strengthening in Phoenix's financial position.'
