Challenges ahead after higher costs erode TVB profit

Free-to-air channel Television Broadcasts (TVB) reported a 9 per cent decline in net profit to HK$770 million for the six months to June on higher costs.

Total costs, including cost of sales, selling, distribution and transmission expenses, and general and administrative expenses, increased 15 per cent to HK$1.66 billion from a year earlier.

Turnover grew 6 per cent to HK$2.6 billion.

TVB said in a filing to the Hong Kong stock exchange that this year remained challenging as the sluggish recovery of the economy in mainland China and the United States "may limit growth in advertising spending during the second half".

During the first half of the year, makers of infant milk formula remained the highest-spending advertisers, TVB said. Mobile-phone and equipment companies also spent more advertising dollars to support the launch of new products, contributing substantially to revenue, the firm said.

"To ensure that we are capturing the advertising spending in the second half of the year, our immediate priority is to further strengthen our programming on terrestrial channels," executive chairman Norman Leung Nai-pang said in the filing.