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SCMP Reporter

The Hong Kong broadcaster can start collecting revenue from over the border a year after securing landing rights

Asia Television (ATV) will be entitled to 20 per cent to 25 per cent of advertising revenues generated in nine Pearl River Delta cities and 50 per cent from a provincial network under a recently negotiated agreement with the Guangdong Administration of Radio, Film and Television,  according to industry sources.

But part of the deal is contingent on meeting an ambitious 300 million yuan annual sales target.  ATV will also forego the right to collect ad revenues in cities beyond the Pearl River Delta.

ATV's agreement, reached more than a year after it secured formal landing rights for its signal in  the province, sets an important precedent for a similar revenue-sharing deal between  the Guangdong television administration and  the station's  local rival, Television Broadcasts (TVB).

TVB is  locked in negotiations with mainland authorities over  landing rights.

Guangdong television viewers have watched ATV and TVB programming for decades as  the broadcast footprints of the stations extend across the border.

But in the absence of formal landing rights, their signals have been carried by local cable operators who splice out the  attached advertising and re-sell the slots to local advertisers.

With limited growth potential in their home market, the two  broadcasters have been eager to claim back at least a share of this pirated revenue stream in Guangdong, where there are an estimated 16 million viewing households.

Industry sources in Guangzhou and Hong Kong told the South China Morning Post that a joint venture between ATV and local broadcasters would be allowed to sell half of all advertising slots in the Pearl River Delta cities of Dongguan, Foshan, Huizhou, Jiangmen, Shaoxing, Zhongshan and Zhuhai.

A joint venture with  the Guangdong administration-controlled Southern Television Guangdong (TVS) will be entitled to sell 40 per cent of total advertising slots in the  media markets of Guangzhou and Shenzhen, and 100 per cent on TVS' backbone provincial network.

ATV,   Hong Kong's No2 broadcaster, will in effect be entitled to 25 per cent of ad revenues in the seven Pearl River Delta cities, 20 per cent in Guangzhou and Shenzhen and 50 per cent from the provincial network.

However, ATV will only be able to collect its share from Guangzhou, Shenzhen and TVS' provincial network if  total sales reach 300 million yuan. There is no revenue target for the seven other Pearl River Delta cities.

TVS, which downloads, distributes and occasionally censors ATV's entertainment and news shows on cable networks across the province, is expected to earn 100 million yuan  from ATV's programming this year.

The ratings share of ATV's Cantonese channel in Guangdong is estimated at 25 per cent,  while  estimates put TVB Jade's ratings share  as high as 60 per cent.

ATV chairman Chan Wing-kee  confirmed in October that his company had reached a formal agreement with  the Guangdong administration. But until now, the broadcaster, which  hopes to raise more than $1 billion next year from a main-board listing, had not revealed any details.

'From now on, ATV can sell a  provincial advertising package for its Hong Kong advertisers,' said Kim Eng Securities analyst Jimmy Lam. 'ATV is in a better position to compete with TVB.'

However, the 300 million yuan ad sales target could delay some of the agreement's benefits for ATV.

'It will take time for the new model to operate,' said Sophy So,  executive  purchasing director at media buyer Mindshare China. 'But it is a good start for ATV, which can now finally involve itself in ad-sale operations in Guangdong.'

ATV's advertising agreement for Guangdong

On a provincial network, ATV's joint venture with TVS can sell 100 per cent of advertising airtime

On city networks in Guangzhou and Shenzhen, the joint venture can sell 40 per cent of advertising time.

On city networks in 7 cities, ATV's joint venture with local broadcasters can sell 50 per cent of advertising airtime (7 cities: Foshan, Dongguan, Zhuhai, Zhongshan, Huizhou, Jiangmen and Shaoxing)

On the city networks of the remaining 12 cities in Guangdong, ATV can sell 10 per cent of advertising airtime.

ATV - Asia Television

TVS - Southern Television Guangdong



Guangdong outlines ATV ad deal