Jake's View

New Hong Kong television licences must not be sold cheap

To do so would defraud the public, prevent us from enjoying the full value of our asset

PUBLISHED : Thursday, 13 June, 2013, 12:00am
UPDATED : Thursday, 13 June, 2013, 6:26am

The publicity battle between three television stations hoping to start broadcasting on free-to-air channels is heating up amid talk that the government may grant new licences only to "winning" bidders.

SCMP, June 11

The rags-to-riches media tycoon Roy Thomson famously described the ownership of an ITV franchise in Britain as a "licence to print money". I would say his joy at his profits was evidence that a Whitehall bureaucrat got it wrong and sold his country's patrimony cheap. Only the British treasury should have been able to print money from a television licence.

Let us remind ourselves here that the radio spectrum over our heads is as much a public asset as public land. They are both valuable assets and the public purse can derive a hefty proportion of its income from leasing them to private entities for commercial or personal use.

But one thing we would not do with a prize piece of development land is grant it at a steep discount to its market value, or for no money at all, to the person who comes up with the prettiest architect's drawings for the building he plans to build on the site.

We may put some restrictions on the use of the site, and we certainly do impose building codes on it, but these are normal conditions of sale. When it comes to the sale itself, we talk only of money. If the site doesn't go to the highest bidder, we make dark hints about going to the Independent Commission Against Corruption (that is if the ICAC isn't too busy investigating itself again).

Another thing we avoid doing in property is holding back from selling as much of it as the market wants because we are worried that existing commercial holders may be unhappy with anything more than token competition. In property auctions, this argument carries no weight at all.

Yet, strange to say, it does appear to carry weight with the Office of the Communications Authority (Ofca), as evidenced by its thinking on the issuance of new terrestrial television licences.

We have two such licences in issue at the moment. (ATV and TVB have them.) Both expire in 2015. Three newcomers now want in, and it seems that Ofca wants to pick and choose between the candidates on the basis of the sort of service they promise to provide.

I would think that this part of the job is easily done with a few simple messages.

No pornography, no obscenity and no subversion of the national government. An infraction could cost you your licence, and you don't want to tempt us.

We may require you to broadcast two or three government advertisements per hour (the world needs a laugh anyway).

That should be it. In the same way that we don't tell a commercial landlord what tenants he may have in a building on a site bought at auction, we shouldn't tell a television licensee what programming to offer. That's his commercial decision.

Nor do we put only two or three development sites up for auction if there is demand for five and we have five available. We may stagger the sales over a few months to get better prices but the intention is always to sell all five. If the developers have their side of the demand picture wrong, it's their problem.

It works best exactly the same way in broadcasting. What the licensee pays for a licence affects only his profits. He will always broadcast what he believes will attract the biggest audiences and the greatest advertising income. If he buys the licence cheap, the difference goes to his profits, not his programming.

And if there really isn't enough audience for five terrestrial licences, one of the licensees will sooner or later hand theirs back, and the market will rebalance itself.

The question before us is therefore a simple one: shall the public purse enjoy the benefit of the full value of this public asset, or shall we give it all to private licensees? Put another way, do our bureaucrats want to make themselves such fools as Lord Thomson of Fleet made British bureaucrats?