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Ben Kwok

Asia Television has amended next year's capital expenditure commitments and a brokerage sees rival Television Broadcasts scaling back investment in its pay-television business.

ATV is expected to trim capital expenditure and the reduction is seen as a gauge of the financial strength of Hong Kong's No 2 free to air TV station.

Yesterday, Broadcasting Authority chairman Norman Leung Nai-pang said the change had been accepted by the government.

He did not provide further details.

As part of the annual licence renewal process, presently under way, both ATV and TVB must detail their capital expenditures.

ATV chief executive Chan Wing-kee declined to talk about the amendments to its expenditure programme.

Last year, former ATV chief executive Feng Xiaoping indicated the broadcaster would commit HK$2.4 billion to programming and HK$700 million to acquiring facilities.

However these figures seemed excessive considering Li Ka-shing's media group Tom.com initially agreed to buy a 32.75 per cent stake in ATV for HK$290 million before walking away from the deal.

That price valued the whole station at HK$886 million.

Mr Leung said both ATV and TVB had reached an agreement with the authority on extending their broadcasting licences.

The extensions are expected to be finalised next week.

The Broadcasting Authority accepted both companies' future capital commitments.

Meanwhile, brokerage CLSA yesterday said TVB would cut its three-year investment in Galaxy Satellite Broadcasting to between US$150 million and US$175 million, down as much as 25 per cent from the original US$200 million.

After meeting the TVB management, CLSA said that the broadcaster, unlike pay-TV incumbent i-Cable Communications, would not need substantial capital expenditure to distribute its programming because it would use satellite delivery.

I-Cable, Hong Kong's dominant pay-TV operator, outlays more than HK$700 million each year for capital expenditure.

CLSA said TVB had re-affirmed its plans to enter the pay-TV market, and indicated it had received an offer from a strategic Western investor to acquire a controlling 51 per cent stake in the Galaxy venture.

However, TVB did not want to give up control, and it had been looking for a three-party deal which would enable it to retain a majority stake.

CLSA said it was sceptical about the seriousness of the offer, 'given that TVB has made similar statements in the past'.

Yesterday, TVB shares fell 6.47 per cent to close at HK$21.70, a one-year low.

At yesterday's Broadcasting Authority monthly meeting, Mr Leung said PCCW could keep its video on demand licence for six more months.

On October 1 the company scrapped its moribund iTV unit.

PCCW decided to pull the plug on the four-year experiment with interactive pay-TV services - begun by the former Hongkong Telecom - saying that its Network of the World (NOW) service was beginning to mature into serving the same customers.

PCCW officials could not be reached for comment.



Broadcasters taking knife to capital costs