Television Broadcasts (TVB)

Chinese funds pile into Hong Kong broadcasters for pot of gold

Suitors swarm around TVB, ATV and i-Cable, drawn by the prospect of instant exposure and influence

PUBLISHED : Friday, 10 February, 2017, 5:44pm
UPDATED : Friday, 10 February, 2017, 11:21pm

First, troubled broadcaster Asia Television was rescued from the brink of bankruptcy by a white knight.

Now, pay television operator i-Cable Communications is close to being sold to a Chinese company, while TVB – the largest television broadcaster in Hong Kong – has a Beijing suitor offering to buy a majority stake.

Suddenly, Hong Kong’s television broadcasters are a hit with mainland Chinese buyers.

Buying a well-known television company is a short cut to overnight fame
Joseph Tong Tang, chairman, Morton Securities

That is contrary to the notion that old-school television is destined for the history books, as a younger generation shifts its viewing habits to streaming services like YouTube, Netflix, Tudou or iQiyi.

What’s the point of owning a television network, which is costly to run amid declining advertising revenue?

The main attraction is the exposure and political influence that comes with it, analysts said.

“Television broadcasters are popular with many mainland Chinese companies, which want to make their names known to the public,” said Joseph Tong Tang, chairman of Morton Securities in Hong Kong. “Buying a well-known television company is a short cut to overnight fame, as any such offer soon becomes the focus of media reports.”

Television Broadcasts (TVB) on Wednesday said it had received an unsolicited takeover offer from little-known TLG Movie & Entertainment Group, a unit of Beijing-based Top legend Group. A day later, TVB’s share price jumped to an 11-month high.

TLG which invests in real estate, entertainment and media, was founded by Hong Kong native Alex Chow. His company is interested in TVB’s trove of archival material, including movies, comedies and dramas by such stars as Tony Leung Chiu-wai and Andy Lau Tak-wah, all of whom owe their career breaks to TVB.

“If we succeed in acquiring TVB, we’ll be interested to integrate its intellectual property into real estate projects related to culture, sports and the media industry,” Chow said in a phone interview with the South China Morning Post. “Our main purpose is to help TVB develop its main business.”

TVB, which has been in business for almost half a century, has been approached by many suitors, Tong said.

To take over TVB, Chow’s company will have to top the HK$4.2 billion, or HK$30.50 per TVB share offer that the broadcaster’s controlling shareholders have proposed to buy back TVB’s shares.

“I promise the price we offer will not be low,” Chow said, adding that his company will announce the details in the next one or two weeks. “What I can say is that our offer price will not run at HK$28 or HK$29,” because he had already lined up financial backers for the takeover, he said.

“For those who can afford it, TVB is the number one choice as it’s the biggest television broadcaster in Hong Kong,” Tong said. “Hong Kong people and other Chinese communities around the world grew up with TVB’s stars such as Andy Lau and Chow Yun-fat, and its dramas.”

TVB and ATV competed head-to-head for Hong Kong’s Cantonese-speaking viewers, offering news programmes, variety shows, comedies and dramas. They were the trend setters of the 1980s, when ethnic-Chinese viewers in Asia emigrants in North America and Europe had a dearth of Chinese-language entertainment options.

TVB was the predominant ratings leader, winning as much as 90 per cent of viewing audiences. Its ratings dominance gave TVB the financial strength to list its shares on the Hong Kong bourse.

ATV wallowed in losses, so much so that it could not afford to pay its licence fee and staff costs, before going into provisional liquidation in February 2016, and was finally taken off air two months later, ending 59 years of broadcasting.

It did not take long for ATV’s liquidator Derek Lai Kar-yan to find a white knight, in the form of Hong Kong-listed fabrics weaver Co-Prosperity Holdings, which offered HK$500 million to buy 52.42 per cent of ATV. The takeover, approved by shareholders, is awaiting the nod of the court.

ATV received a lot of queries from prospective buyers, even after it lost its broadcasting licence in Hong Kong, Lai said.

“Chinese companies want to buy Hong Kong broadcasters for the influence they provide,” Lai said. “Television still has a big influence in society, and any owner will receive lots of attention from the media.”

The movies and drama series including such hits as The Young Dowagerfrom ATV’s archives can always be sold to other broadcasters, or video streaming sites, which are always in need of content, said Lai.

“In future, you can’t rule out the possibility of ATV applying for another broadcasting licence” once it gets its finances back on its feet, Lai said.

Co-Prosperity, chaired by Tang Hon Kwo, prints and sells fabrics and clothing, while also producing dramas for video streaming sites.

In a December filing to the Hong Kong exchange, Tang said he plans to use the ATV acquisition to expand its media and entertainment business as the textile industry faces challenging times amid China’s economic slowdown.

“It’s expected that upon completion, the group shall proceed with the restructuring of ATV,” Tang said. “ATV was the first television broadcasting company in Hong Kong, with nearly 60 years of history. It has produced many successful TV programmes, dramas and news programmes as well as entertainment shows over the years. In addition, it also holds a number of valuable intellectual properties such as the Miss Asia Pageant.”

Tang said even without a licence, the firm could produce programmes to be shown on the internet or other platforms.

Wharf Holdings, owner of pay television station i-Cable, is close to finalising a sale to a mainland Chinese buyer, according to a source familiar with the matter, without divulging the buyer’s identity.

Hong Kong limits the city’s free-to-air licence owners to Hong Kong residents who have resided in the city for at least seven years.

New television station owners will face a number of challenges besides regulatory hurdles.

Analysts said a key for TVB to reinvigorate its ailing business is to branch out into the mainland. But, as an overseas broadcaster, it would face substantial restrictions under China’s stringent censorship system.

While TVB’s television series are still popular among Cantonese-speaking viewers in southern China, the number of its dramas allowed to be aired online in the mainland are subject to quota, similar to Korean dramas and Hollywood productions, said Guotai Junan Securities’ analyst Ray Zhao.

With additional reporting by Celia Chen in Hong Kong