Asia Television (ATV) is close to finalising an advertising-revenue-sharing agreement with the Guangdong government, even if profits earned in the province cannot be repatriated to Hong Kong, according to industry sources. Profits from the joint venture with Guangdong Television Broadcasting Development Centre could be ploughed back into joint production of television and commercials. The source said: 'The new commercials and programmes will be sold to TV channels on the mainland. It will help ATV develop in China, especially in Guangdong, and not just be limited to Hong Kong. The details will be finalised in one or two months.' ATV's Guangdong partner is ultimately controlled by the government-controlled Guangdong Administration of Radio, Film and Television. Market watchers said the much-awaited operating model would set a precedent for TVB, which has a 30 per cent-plus viewer rating in Guangdong but has yet to receive permission to broadcast officially in the region. A similar joint venture was established between Phoenix Satellite Television and Guangdong earlier this year. The new company, Guangdong International Media, is the exclusive advertising agent for Phoenix's Chinese and InfoNews channels in Guangdong. Phoenix TV said it had a 70:30 split of the TV revenue with Guangdong. Chief executive Liu Changle said it was given such a large portion of the joint venture's advertising sales because its Putonghua channels had a viewer rating of just 2 per cent in the Cantonese-speaking province. Local cable operators did not get much money from editing out the broadcaster's advertisements and replacing them with their own. ATV's Cantonese channel, which received landing rights last year to air in Guangdong, has a viewer rating of 18 per cent. The Guangdong operators were reluctant to share any advertising revenue unless they benefited more. 'The future joint venture can, of course, share the revenue from current ad-splicing,' said another source close to the deal. 'But the terms and sharing portions are yet to be finalised.' According to ATV, it shows a total of 750 hours of TV episodes annually, of which 250 hours are self-developed. Each hourly production costs about HK$400,000. In other words, it spends at least HK$100 million a year on production of TV series. 'Our current production is only enough for one daily slot,' an ATV spokesman said. 'We need to acquire content for another 500 hours.' Analysts said the new venture might finance ATV's operating costs and the broadcaster would be less reliant on buying overseas programmes. But Mona Chung of Core Pacific-Yamaichi added: 'If they cannot bring the money back to Hong Kong, the revenue will only appear on the books. Although the mainland advertising market is very prosperous, it doesn't help the company's bottom line.'