TVB licence deal will 'lessen risk'

MEDIA analysts believe Television Broadcasts' (TVB) agreement to provide Chinese language programming in Europe through a satellite television channel will allow TVB to improve its margins without exposing itself to risk through direct investment.

TVB has signed an undisclosed fixed licence fee to allow The Chinese Channel, a joint-venture between London-listed Wilton Group and a private local company, Shaw Media Corp, to broadcast TVB programmes from St Petersburg to Dublin from midnight on March18.

''The bottom line for TVB is that they are selling existing programmes to a new broadcaster and realising value in a market that otherwise wouldn't be developed,'' said Charles Whitworth, media analyst for James Capel in Hong Kong.

Mr Whitworth added that TVB would earn only ''incremental revenue'' from the deal.

Fred Bowers, media analyst at Nomura Research Institute Hong Kong, agreed.

''For TVB this deal means the downside is limited,'' Mr Bowers said. ''So their attitude is 'why not try it and see if it works'.'' TVB owns two Chinese language television stations, one in Los Angeles and one in San Francisco, is providing Chinese language programmes for a cable television station in Australia, and has embarked on joint ventures in Taiwan and Canada to use some of its 75,000 hours of programmes and produce shows for local audiences.

The Chinese Channel won the rights to exclusively broadcast TVB programmes throughout Europe until 1997, with an option to extend the agreement for another two years.

Total investment in The Chinese Channel is around GBP10 million (about HK$113.9 million), of which Shaw Media Corp has paid about GBP2 million for a 20 per cent stake and the Wilton Group the remainder for an 80 per cent interest in the channel.

Nomura's Mr Bowers believes The Chinese Channel's goal to attract 70,000 subscribers in four years will be difficult to achieve as the estimated Chinese population of 850,000 is not a captive audience.

Overseas Chinese living in Europe had access to other satellite channels, cable television stations and another Chinese language satellite service, China News and Entertainment Ltd (CNE), said Mr Bowers.

CNE, a subsidiary of Hong Kong registered CNT Group, began daily two hour Chinese language broadcasts on satellite and cable television throughout Europe in November 1992.

''The Chinese Channel isn't going to reap any major profits,'' Mr Bowers said. He added that the cost of broadcasting by satellite throughout Europe was expensive, about GBP5 million a year for 24-hour use of a satellite transponder.

Betty Yao, general manager of CNE, said: ''It is tough making money in Europe as the market is not big and you have to provide Cantonese, Mandarin and English programmes for viewers.'' She estimated that 10 to 15 per cent of CNE's audience were Europeans.

Markus Shaw, director of Shaw Media, is not perturbed.

''Surveys we have done indicate that Chinese people living in Europe would welcome The Chinese Channel,'' he said. ''The Chinese Channel will be providing an identity for the Chinese community in Europe. Its programmes will teach Chinese people about their own culture.'' Mr Shaw said The Chinese Channel's broadcasts would be 10 per cent news, 10 per cent programming for women and children, five per cent educational programmes and 75 per cent general entertainment and drama.

News broadcasts will be produced separately by The Chinese Channel in London.

The majority of The Chinese Channel's viewers, Mr Shaw expects, will be overseas Chinese in the European catering industry who work late and want to watch Chinese programmes until the early hours of the morning.