Cable TV gears up to run advertisements from June
Hong Kong's monopoly pay TV provider, Wharf-owned Cable TV, will carry advertising from June.
Amendments to the network's licence passed by the Legislative Council will allow Cable TV to carry 10 minutes of advertising each hour, the same as Television Broadcasts (TVB) and Asia Television (ATV).
Cable said it was still formulating its rates. A sales team has been assembled, led by former TVB executive Samuel Tsang.
The network plans to provide 'competitive' advertising rates, although a study by management consultants KPMG, commissioned by the Government, estimated that Cable TV would collect no more than 6 per cent of the total TV-advertising pie.
The network said subscriptions would still account for 90 per cent of its income by 2000.
Cable TV is in discussions with overseas channel providers such as ESPN, CNN International and NBC Asia about whether to run their existing advertising, replace it with locally-produced slots, or continue to carry local filler material in place of advertisements during commercial breaks.
Talks were also being held with Hong Kong regulators to see whether the advertisements meet the territory's guidelines.
Stripping out the commercials at present costs Cable TV US$128,000 a year for each channel.
Under the terms of its licence, Cable TV has been entitled to carry advertising since June last year, when its exclusive right to provide pay channels ended.
The Government then decided that the costs of building the fibre-optic network meant Cable TV's break-even point would be delayed. Last April, it postponed awarding any more pay TV licences until after a review of the industry in mid-1998.
In return, Cable TV tacitly agreed not to insist on the right to carry advertising until its licence was amended last month.
About 330,000 of Hong Kong households subscribe to Cable TV.