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SCMP Reporter

Analysts predict dominant free-to-air broadcaster Television Broadcasts (TVB) will deliver disappointing results this week due to sharply slumping advertising revenue.

TVB is expected to report on Wednesday a 21.16 per cent decline in net profit for last year to HK$610.39 million, according to Thomson Financial First Call.

The firm, controlled by Sir Run Run Shaw, holds the lion's share of local television advertising. But with the economy sluggish, advertisers have tightened their belts.

The Chinese-language Jade channel accounted for 67 per cent and English-language Pearl 3 per cent of total viewership last year, says monitoring agency ACNielsen Media International.

Merrill Lynch analyst David Cui estimated the revenue generated by the television market fell 7 per cent to $2.1 billion last year.

'We may see a further decline of 7 per cent in advertising turnover this year,' he said.

The broadcaster is offering incentives that allow advertisers to cut budgets by 15 per cent while enjoying last year's packages.

Meanwhile, its overseas operations, estimated to account for about 35 per cent of total revenue last year, have to pay close attention to the Taiwanese unit TVBS. Mr Cui expected the TVBS loss would widen from HK$20 million in 2000 to $50 million.

The pay-television project, Galaxy Satellite Broadcasting, remains the main uncertainty for the market, according to analysts.

HSBC analyst Anne Ling expected TVB to take a different approach to entering the Hong Kong pay-television market - as a content provider. 'The Hong Kong pay-TV project has been the key issue overshadowing TVB's share price . . . due to the currently unfavourable environment, we believe the project might be deferred,' she said.

In November last year, the market had been upbeat on TVB as it formed joint ventures with state-run China Central Television and Shanghai partners on broadband and programme production projects. ICEA analyst George Chan said the ventures might not materialise for two more years.



Ad income fall dims TVB profit picture