First-half loss at i-Cable widens as subscriptions, advertising shrink
i-Cable Communications, the Hong Kong pay-television broadcaster abandoned in March by its largest shareholder Wharf Holdings after nine years of financial haemorrhage, has reported a larger first-half loss due to shrinking subscriptions and declining advertising, underscoring the challenges for the new investors who are due to take it over in September.
The company, which launched the city’s first cable TV network in 1993, said its loss widened by 4 per cent to HK$141 million (US$18 million) in the first six months of 2017, while revenue shrank 10 per cent to HK$641 million.
The financial woes at i-Cable reflect the ongoing challenges faced by Hong Kong’s publishers and broadcasters, as advertising migrates to online platforms and digital media, while shrinking tourist spending, and an ageing population shift consumption patterns. Television faces the challenge of live streaming video, social media networks and online media, where the business model of the traditional network television has been upended by entertainment that’s available anytime, anywhere.
The network’s revenue has been falling every year since 2013, as Hong Kong’s subscribers were lured away by increasing choices of free online entertainment content, while a 1 per cent decline in retail sales in the first five months crimped advertising budgets.
“The advertising market remained quite weak generally and was exacerbated by competition from free TV, digital and [Internet-enabled over-the-top content distribution] platforms,” i-Cable said in a filing to Hong Kong’s bourse on Wednesday. “On the subscription business front, contraction of customer base remained but [average revenue per user] continued to improve.”
Operating costs before depreciation rose 3 per cent to HK$759 million, mainly due to “a provision for government rent recently assessed on in-building wiring network”, to which the firm has objected, i—Cable said.
The share price of i-Cable slid 1.9 per cent to HK$0.53 before its results were announced. The stock, which fell by 32 per cent since the start of 2017 amid an advancing market, has never recovered from its 1999 initial public offering, when it debuted at HK$15.75.
Wharf, which has owned i-Cable since its establishment a quarter of a century ago, announced in March that it was throwing in the towel, stopping to provide any additional funding to the broadcaster. The company’s debt ballooned 69 per cent to HK$662 million at the end of June, from HK$393 million a year ago, while its staff size shrank 11 per cent to 1,940 employees.
With Wharf’s retreat, property tycoons Henry Cheng Kar-shun and David Chiu Tat-cheong emerged as the main backers of a white knight consortium called Forever Top to rescue i-Cable.
Forever Top will become the majority shareholder of i-Cable after a HK$669 million rights shares offer to existing shareholders in September, from which Wharf will abstain.