My TakeTVB bonds blunder beats any soap opera
- Latest profit warning by the television giant is sheer embarrassment and comes in the wake of disastrous deal with mainland theatre operator SMI Holdings Group
TVB’s once popular soap operas and variety shows have become self-parodies. Sadly, those in charge of its finances aren’t the sharpest tool in the shed, either. It has been said that its rise to TV dominance mirrored the golden age of Hong Kong. Let’s hope its decline doesn’t represent the same parallel for the city.
TVB’s latest profit warning is sheer embarrassment. It is expecting a HK$200 million net loss for the financial year ending December 31, 2018. The losses mostly stemmed from a write-off of HK$500 million on its holdings of convertible bonds issued by mainland theatre operator SMI Holdings Group. TVB’s share price promptly fell by more than 8.5 per cent on Monday.
Rarely did a corporate investment by a major company turn sour so quickly, in a matter of months. When the TV station announced its purchase of SMI bonds worth HK$651.55 million in May last year, it was positively bullish.
Not only did the purchase pay 7.5 per cent interest per year over two years, extendable for a third, it was also convertible into equity. Besides providing a steady income stream at a time of declining profit in Hong Kong, it also offered the prospect of a slice of the country’s fast-growing cinema market.
China is the world’s second-largest market in terms of box office takes. At that time, SMI ran 320 theatres across the mainland and was the country’s fourth-largest cinema operator with 1,945 screens.