TVB Argues Hong Kong Market Cannot Support New TV Stations
TVB has enjoyed its monopoly over the Hong Kong free television broadcasting market for years, especially with the dwindling life of ATV. TVB is not ready to let go of its dominance, arguing that the Hong Kong advertising market is too small to support the existence of new free broadcasting stations. TVB is also questioning the government’s legality to do so before the station’s broadcasting license expires in 2015.
The Hong Kong government’s stance remains unclear over the issue of free broadcasting TV licenses, and if it were to approve new free broadcasting stations, the number of licenses it would grant. Although City Telecom (CTI) had applied for the broadcasting license nearly three years ago, the government has been stalling and still has not approved the application yet.
Amidst CTI’s high-profile appeal towards the government to approve its license application by next year, TVB is countering on all fronts by questioning the long-term viability of the stations should new competition emerge.
TVB executive, Mark Lee (李寶安), cited that the advertising revenue of all Hong Kong TV channels combined is approximately $3 billion HKD. Over the last 15 years, TVB’s advertising revenue grew by $800 million HKD; nearly all of the growth was at the expense of ATV, who saw negative decline year-after-year. Mark Lee argued that the universe of advertising revenue has not grown; fundamentally, the Hong Kong market is too small to support the entry of new free TV stations.
Lee challenged that advertising monitor, admanGo.com’s estimate of $18 billion HKD in advertising revenue last year was inherently flawed, which did not take into account deep discounts to frequent advertisers. “If there is indeed $18 billion HKD worth of advertising, I won’t really care how many stations there are,” Lee told the South China Morning Post.
If TVB’s financial performance were threatened by new free TV stations, Lee said TVB will have to consider scaling back on employee benefits and even production resources, which will adversely affect the quality of its TV programming. Audiences are already complaining that the quality of TVB dramas is shoddy, but Lee foresees even steeper declines ahead if company resources are threatened.
TVB has been promising its employees a better benefits package, with plans to reduce the number of work days to five days per week, similar to many office workers in Hong Kong. More than 4,200 staff members will be impacted under TVB’s improved benefits package.
However, Lee noted that the new benefits package will not be implemented if there are any market conditions and advertising revenue changes, which may be the adverse results with the emergence of of new local stations.
However, TVB Executive Chairman, Norman Leung (梁乃鵬) promised that there will be pay raises. The last time TVB employees saw their salaries increased to combat inflation was in July. “Salary increments will not be affected. Don’t worry, I guarantee your bonus this year will be better than the last!”
Several months ago, TVB announced that it was considering injecting $50 million HKD into its international English channel, Pearl Channel, to be broadcast via satellite. The company had planned to cater to overseas Chinese in Europe, Australia, and South East Asia. However, the project is now put on hold due to uncertainty in current market conditions and the risks associated with more competition.
As to CTI Chairman, Ricky Wong’s (王維基), poaching of TVB production staff and artists with better benefit packages, Mark Lee, said that CTI was trying to paralyze TVB’s productions. On one hand, Ricky Wong criticized TVB’s incompetent production teams, yet he offered higher salaries to hire the same people to work for CTI.
Audiences of Hong Kong dramas may care less about the political and boardroom squabbles and only how this will affect their entertainment viewing options. Were the promises of a more competitive market and higher quality dramas within reach, but not to be realized?
This article is written by Lance for JayneStars.com.
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