TVB warned its emerging rivals yesterday that the television business was not as profitable as it might appear, since advertising income had not grown in the past 15 years.
The city's largest broadcaster issued the caution even as it unveiled a 17 per cent increase in net profit to HK$1.56 billion. A solid rise in earnings was backed by strong advertising sales, which jumped by 14 per cent year-on-year.
But executive director Mark Lee Po-on said TVB was able to report an increased profit only because it had kept ahead of its rivals and continued to expand its share of the limited advertising market. He also criticised the government for proposing to grant three more free-to-air TV licences as neither open nor fair, and warned that more competition in the small local market could drive some TV stations out of business.
'The value of TV advertising sales has remained unchanged for 15 years. In 1996 it was HK$3 billion and in 2011 it was still HK$3 billion. Is there enough room for the market to grow from two TV stations to five?'
Lee said it would also be unfair to TVB and ATV - the only free-to-air channels in Hong Kong - if the government allowed new entrants to operate pay-TV businesses with terrestrial signals, which now only broadcast free-to-air programmes.
'Someone will not be able to handle [the competition] given the size of the cake,' Lee said. 'Closure [of a TV station] has happened before.'
The vice-chairman of the Hong Kong Televisioners Association, Lam Yuk-wah, said Lee had distorted the facts to TVB's advantage.
'The closure of Commercial TV back then was not due to its financial situation but licence compliance issues. Maybe TVB should seek to strengthen its competitive edge instead of fighting against competition,' Lam said.
So they would, said Lee, noting that TVB was finalising several joint-venture agreements with mainland companies that could help secure licensing and broadcast rights for screening Hong Kong programmes on the mainland. TVB would also seek to produce more programmes for mainland audiences and give its artists more opportunities to star in better-paid mainland dramas.
Lee said TVB would add more paid services to its online platform myTV.com, enhance its internet and multimedia platforms, and expand its overseas operations - which he expected would soon become the station's major revenue spinner.
TVB said it would also spend HK$1 billion to expand its film studio in Tseung Kwan O.
The year that Commercial Television, the third free-to-air station, began broadcasting. It collapsed in 1978 and was declared bankrupt