The introduction of digital television broadcasting would open up new business avenues for Hong Kong's two free-to-air television broadcasters, an industry executive said. TVB's general manager, Cheong Shin-keong, said the digital broadcasting service would provide new opportunities such as leasing of network capacity to other broadcasters. ATV management has said the company might offer a telecoms service over the digital network, as the government has approved broadcasters using spare capacity for other services. Mr Cheong said TVB had committed to spending at least HK$400 million on digital terrestrial broadcasting, half of which would be invested in the digital broadcasting network. TVB will launch a 24-hour high-definition channel today and two new channels next year - one providing news and information and the other concentrating on young people. But TVB does not expect to generate much advertising revenue from the new channels. 'For free-TV operations, only TVB's Jade channel has been profitable for a long time, while Pearl has achieved profits only in recent years,' Mr Cheong said. 'The other free TV channels don't make any profit either. It will be difficult for a new channel to achieve HK$100 million a year in advertising revenue at the initial stage.' Mr Cheong said there would be room for 'one or two more free-TV channels in the niche segment'. Silvia Ko, a media analyst at BNP Paribas, agreed digital television might not attract much advertising revenue initially. 'We believe there is a risk that the high-definition channel will fail to attract enough advertisers when launched,' she said. 'Having said that, we understand TVB is likely to bundle the existing channels with HD channels for advertising package promotions. We see this as a positive strategy to mitigate the initial low advertiser interest in HD channels.' TVB and ATV say they will provide a free digital television service to about 75 per cent of households by August. TVB estimates its own digital broadcasting service will reach 60 per cent to 70 per cent of households in five years. 'We expect there will be 300,000 to 500,000 households that will switch to digital flat panel TV sets,' Mr Cheong said.
