TV industry still divided over HKTV’s licence rejection

PUBLISHED : Monday, 04 November, 2013, 10:00pm
UPDATED : Monday, 04 November, 2013, 10:00pm

Three weeks after the government’s controversial decision, veterans familiar with the television industry remained divided over whether officials made the right choice in denying Hong Kong Television Network’s (HKTV) application for a free-to-air licence, while approving that of i-Cable and PCCW’s subsidiaries.

On Sunday, Exco convenor Lam Woon-kwong cited the view of the government’s consultant that, based on existing advertising revenue, the market could “barely support” two new players, in addition to TVB and ATV – and “it is extremely likely that someone would fail” in a competition among five licence holders.

This view is supported by veteran broadcaster Robert Chua Wah-peng, who estimated that in a five-horse race, an operating loss of HK$5 billion would have to be shared by the stations (based on HK$10 billion operating costs for the five stations and an estimated HK$5 billion TV advertising spend).

But Peter Lam Yuk-wah, vice-president of the Hong Kong Televisioners Association, questioned Exco’s and the consultant’s assessment.

Advertising revenue “should increase” when new players were added to the market, and television stations also relied on other sources of income, including fees incurred from licensing or selling their productions overseas, Lam said.

In an article published on the Post on Tuesday, Chua, who was a founding executive producer of TVB, wrote that he would have “recommended that the government award one free TV station licence instead of the two they did”, as viewership “will continue to fall as people turn to the internet for entertainment”.

Chua said while he “gives [HKTV chairman] Ricky Wong full points for his passion and his self-confidence in wanting to operate a free station”, he feared that in a more fiercely competitive market and “with lower budgets, TV stations can only produce lower quality and low-taste programmes.”

Analysts also questioned whether HKTV had been too “aggressive” by pledging to spend HK$1 billion on original content and offer 30 free channels.

That criticism was echoed by pro-Beijing Wen Wei Po, which quoted a source on November 1 listing eight reasons, including lack of financial sustainability, to explain why HKTV’s bid was denied. It also accused HKTV of “failing to meet the basic requirement as it has no plan to start an English channel”.

Lack of financial sustainability was also cited by New People’s Party lawmaker Michael Tien Puk-sun on Monday as the main reason the government rejected the HKTV application.

Tien said officials told him that the consultancy’s report rated i-Cable and PCCW’s subsidiaries and HKTV on four main principles - financial, technological and production ability, and programme strategy and investment.

“[Officials] believe that the most important principle is [whether] a television station could operate in a financially sustainable manner, and for that principle, the consultancy report rated HKTV with the lowest score [among the three applicants], which then also gave it the lowest overall score,” Tien said.

However, in a column published on the Sky Post on Monday, HKTV chairman Ricky Wong Wai-kay dismissed earlier criticism that his company lacked “financial stability”.

We have more than HK$2 billion in cash. We have no debt,” Wong said. “We have been making profit over the last five years – we are very stable financially
HKTV chairman Ricky Wong Wai-kay

“We have more than HK$2 billion in cash. We have no debt,” Wong said. “We have been making profit over the last five years – we are very stable financially.”

Wong also said in the column that HKTV had always been planning to start an English channel and said it was wrong to question the viability of his application based on planned expenditure.

“As a businessman, if I were to spend HK$2 billion on production, I would certainly secure the source of income first – for example, by [selling programmes] overseas,” Wong wrote.

To resolve the month-long argument, Chua recommended that Wong continue producing programmes “while waiting for the opportunity to apply to takeover of the ATV free TV licence that is due to expire in 2015, or sooner if the government cancels its licence because of a breach of conditions.”

“I cannot see how ATV can be allowed to renew their free-to-air TV licence when it expires in 2015 with their incredibly poor track record and dismal performance over the past few years,” Chua said.

Lam suggested that the government should review the performance of i-Cable and PCCW’s subsidiaries in a year’s time, which will be a good opportunity to re-consider granting a licence to HKTV.