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TVB to quit pay TV market in Hong Kong after years of losses

Broadcaster blames piracy and internet rivals for decision to surrender licence but accuses the government of failing to support industry

PUBLISHED : Tuesday, 10 January, 2017, 10:11pm
UPDATED : Tuesday, 10 January, 2017, 11:22pm

TVB is to scrap its pay TV arm after operating in the red for years and losing more than HK$2.2 billion.

The decision reflects the problem of rampant online piracy, the growing threat from internet-based alternatives and the economic slowdown.

But bosses at TVB Network Vision also accused the government of failing to provide a sustainable environment for the industry, although one lawmaker cast doubts on this claim and suggested the trend was a global one.

TVB is the last of four operators who were granted pay TV licences in 2000 to quit the market. TV Plus and Yes Television both returned their licences in 2004, while Hong Kong Network TV surrendered its licence in 2001 even before launching a service.

Hong Kong broadcaster TVB reports 30pc decline in operating profit on lower ad spending

With TVB’s exit, the city has only two pay TV providers – Cable TV Hong Kong and Now TV.

There have been rumours that Cable TV’s parent company, property giant Wharf Holdings, is stepping up efforts to sell the station, while Now TV is diversifying into over-the-top online content services as the market trend shifts to internet-based delivery modes.

Cable TV lost HK$233 million in 2015 in the latest full-year financial results, according to the listed company’s filings to the Hong Kong stock exchange.

TVB’s decision to end its pay TV operation came after it warned of a sharp decline in net profit for 2016, with net earnings expected to be down by between 55 and 65 per cent. In 2015 the broadcaster recorded a 6 per cent decrease in net profit to HK$1.33 billion from HK$1.41 billion in 2014.

“The deteriorating business and operating environment in recent years have rendered the pay TV business not commercially viable,” a TVB spokesman said on Tuesday.

“Regrettably, the government has done little to address the issues, particularly online piracy and some of the regulatory provisions which do not keep up with the times.”

He said “virtually all the content” provided by TVB had been pirated.

Backed by a HK$1 billion war chest, Cable TV becomes Hong Kong’s latest free-to-air network

But lawmaker Charles Mok, representing the information technology constituency, said it was inevitable that the traditional pay TV business model would decline with technological advances.

Unlike internet-based services such as Netflix and Amazon Prime, Mok said, pay TV licensees were bound by regulations and rules. This, combined with technological and network disadvantages, meant the model had become unviable.

“I don’t think there is much the government can do. If there is a convenient means [to deliver content], then there would still be a market,” he said.

But Mok was more optimistic about the two remaining players in the market.

“[Cable TV and Now TV] offer a more diversified programme choice – their bundled packages usually include many overseas channels,” the lawmaker said.

“Meanwhile, TVB’s pay TV subscription contained mostly their own, and sometimes old content.”

TVB said the pay TV service would end once the government had accepted the surrender of the licence.

Special packages are being offered to existing subscribers to migrate to the newly launched myTV SUPER, which has 2.3 million users.