Profit at Hong Kong broadcaster TVB drops 62 per cent amid economic slow down

Television Broadcasts announced on Wednesday net profit plunged 62 per cent last year amid a lingering economic slowdown in Hong Kong and lower advertising revenue, sparked by sluggish retail sales.

The city’s premier free-to-air terrestrial television broadcaster said earnings amounted to HK$500 million (US$64.4 million) last year, compared HK$1.33 billion in 2015.

“The market outlook for 2017 remains uncertain and advertising sales may take time to recover,” the company said, according to a filing to the stock exchange.

The firm attributed the fall in profit to four key factors.

“A decline in revenue of HK$398 million from Hong Kong TV broadcasting; an under-recovery of HK$150 million from broadcast of the Rio 2016 Olympic Games; net start-up costs of HK$44 million for the new myTV SUPER service; and a smaller net exceptional gain in 2016 relating mainly to the disposals of the remaining interest in Taiwan operations and the impairment loss relating to pay TV business, TVB Network Vision, making up to an amount of HK$115 million,” it said.

Revenue saw a year-on-year 5 per cent decline to HK$4.21 billion last year.

The company said the proposed HK$4.2 billion share buy-back would enhance shareholders’ value.

The offer is currently subject to the regulatory process and the date for an extraordinary general meeting has not been fixed.

“Hong Kong’s economic downturn has persisted since the last quarter of 2014, dampening local

consumer spending and the retail market. We are experiencing one of the most difficult

operating environments in our history,” said chairman Charles Chan Kwok-keung in a statement accompanying the results.

“ Our traditional business of terrestrial TV broadcasting has been disrupted by a sluggish advertising market, the aftermath of media content globalisation, and the changing viewing habits of our audience.”

To innovate and adapt to changes, the firm has strategically extended the distribution of programmes into digital new media both in Hong Kong and overseas since the beginning 2016.

It has achieved initial success in garnering more than 3 million users of myTV SUPER service which debuted in Hong Kong in April 2016. The number of users have exceeded its original target of 1.4 million users by November 2017.

Hong Kong TV broadcasting, the largest business segment of the firm, was mainly supported by advertising, which remained sluggish throughout 2016.

“The softness was the result of lacklustre retail sales, which have continuously been dropping since March 2015,” said chief executive Mark Lee Po-on in the company statement.

To overcome such a difficult market, the firm’s sales strategy is to target new advertisers. tailor-make one-stop advertising solutions for customers and revamp its internal process to facilitate sales and to enhance customers’ experience,” said Lee.

Shares of TVB edged up 0.458 per cent to close at HK$32.90 before the company announced its results.