TVS plans to raise charges on pirated HK programming
Sidney Luk in Guangzhou
TV ad rates may be raised to cover loss
One of Guangdong's biggest broadcasters has proposed increasing advertising rates on pirated Hong Kong programming by as much as 80 per cent to mitigate possible financial losses arising from greater restrictions on prime-time advertising.
Southern Television Guangdong (TVS), which operates under the auspices of the Guangdong Administration of Radio, Film and Television, downloads and distributes programmes beamed by Hong Kong broadcasters Television Broadcasts (TVB) and Asia Television (ATV) on cable networks across Guangdong. Like many provincial network operators, TVS blocks out the advertising embedded in TVB and ATV's feeds and re-sells the advertising slots in a widespread practice known as ad-splicing.
According to a proposed rate card given to selected advertising agencies late last month and seen by the South China Morning Post, Nanfang Television has proposed raising prices for prime-time TVB ad slots by 60 to 80 per cent.
As a partial concession for the proposed rate rise, which has caught media buyers by surprise, TVS said it would scale back its official prime-time period by two hours - from 6pm to 11pm at present to between 7pm and 10pm. Prime-time slots typically account for about 75 per cent of stations' ad revenues.
TVB's Cantonese channel Jade is exceptionally popular in Guangdong with a 60 per cent ratings share. It has been a goldmine for Nanfang Television which, industry sources said, would earn 200 million yuan from pirating TVB's ad slots this year and 100 million yuan from re-selling ATV advertising.
The Guangdong television administration recently increased TVS' 2004 ad-sales target for pirated TVB programming to 300 million yuan.
The proposed increases were inspired by a recent directive from the State Administration of Radio, Film and Television that will ban domestic stations from selling advertising during prime-time programming and instead restrict ads to slots between programmes.
The restriction, known as Regulation 17, also limits commercials to no more than 15 per cent of airtime from 7pm to 9pm and has been in existence for a long time. But the state television administration recently reiterated its intention to enforce it on all mainland broadcasters with effect from January 1.
At present, China Central Television's various stations adhere to Regulation 17.
But it is routinely ignored by CCTV's regional competitors, and has been interpreted as a move to shore up CCTV's competitive position. The state television administration has threatened violators with revocation of their broadcasting licences.
Roy Kong, media director at Starcom Worldwide, the media-buying arm of advertising agencies Leo Burnett and MediaVest, said: '[Guangdong operators] are using revenue from TVB to fund their own channels. The worries and uncertainties coming from Regulation 17 have caused them to increase the ad rates.'
It is unlikely that Regulation 17 would be applied to TVB and ATV, which cannot develop a second stream of ad-free prime-time programming for mainland consumption. But the uncertainty has complicated on-going landing rights negotiations between TVB and the state television administration. Administration director Zhu Hong said it was still studying if Regulation 17 would apply to TVB and ATV in Guangdong. 'We need further discussions with the local government and no decisions have been made yet,' he said.
An official at TVS' advertising centre said, 'The regulation should not affect us too much as we can continue to splice ads into TVB and ATV's programmes.'
Nevertheless, Guangdong broadcast officials are lobbying the state administration for the entire province to be exempted from Regulation 17, on the grounds that local channels have to compete against Hong Kong and foreign channels.
A source close to the Guangdong television administration said: 'They are telling the state administration that Guangdong's situation is complex. It has its own set of landing rights [for selected Hong Kong and foreign channels] and it is an important market for foreign investment.'
Other Guangdong broadcasters including Zhujiang Television are awaiting a decision from the state administration before finalising their 2004 advertising rates.