Shares in Hong Kong broadcaster i-Cable slump on news that parent Wharf will cut off funding

Fears that pay television operator will have to close prompt worries by Journalists Association about the state of the media in the city

PUBLISHED : Friday, 10 March, 2017, 9:17pm
UPDATED : Friday, 10 March, 2017, 11:08pm

Struggling pay television and broadband service provider i-Cable emerged as the biggest loser on Friday as its market value slumped 46 per cent at one stage on news that it may shut down after its parent said it would turn off the money tap.

Its share price plunged to as low as 50 cents in the morning trading session, but ended up slightly higher at 60 cents.

As many as 900,000 subscribers and more than 2,000 staff are in limbo amid desperate efforts by the 24-year-old TV station to secure fresh funding before its licence expires in May.

i-Cable sale up in the air as losses mount amid tough Hong Kong TV market

Its parent company, developer Wharf Holdings, announced on Thursday that it would not provide further funding to the unit after the current HK$400 million loan is spent.

The news came as a blow to the city’s media sector, with Hong Kong Journalists Association chairwoman Sham Yee-lan warning that the quality of information received by local viewers could be impaired if the station closes.

“I am very sad and shocked at the news,” Sham said. “It has worsened the already very grave situation of the news industry.”

She said the public rated the troubled TV channel highest for news quality and it was famous for reporting politically sensitive news from mainland China.

She said since about 300 to 400 editorial staff could lose their jobs, Wharf should try everything possible to rescue i-Cable.

Speaking at the same Journalists Association function, chief executive candidate Carrie Lam Cheng Yuet-ngor noted that the announcement about i-Cable was a business decision but it could affect the journalists working there. The former chief secretary said she could not reveal past government deliberations on TV licensing matters.

Another candidate, Woo Kwok-hing, said he found the news “disturbing” and was worried about the impact on the media industry, but he understood it was a “business decision”.

The Post has learned that the TV station has sent an internal email to its employees saying that the company had appointed a financial adviser and urging all staff to remain in their posts.

“The company believes it will have enough money to pay us. But it does not rule out any lay-offs,” an employee told the Post after participating in an internal briefing with management.

Despite its reputation, the pay-TV service has been a drain on its parent company.

The media unit has lost money for nine consecutive years, and is facing fierce competition from newcomers like set-top video-streaming service providers Netflix and LeEco. Its subscriber base shrank 3.7 per cent to 909,000 households within the six-month period to the end of December.

Professor Anthony Fung Ying-him of Chinese University’s school of journalism and communication blamed the overprotective licensing system, which made the station slow to adapt to the habits of younger viewers.

“The government has been rather conservative and protective on the local TV market,” Fung said, which was reflected in its reluctance to issue new free-to-air TV licences.

“Such a licensing system actually does not encourage media competition. Local stations did not have the competitive power when internet-based players such as Netflix joined the game, ” he said.

The monthly fee charged by Netflix is only one third of that charged by i-Cable .

Despite its gloomy future, the pay-TV channel was still accepting new subscribers on Friday.

The Consumer Council urged i-Cable to notify existing subscribers about refund arrangements once management confirms the future direction of the company.

In contrast with the slump in i-Cable’s share price, Wharf shares jumped as much as 10 per cent at one stage, closing up 8.7 per cent at HK$67.70.

“Investors are cold blooded,” Fulbright Securities general manager Francis Lun Sheung-nim wrote on his Facebook page.