TVB Argues Hong Kong Market Cannot Support New TV Stations

By on November 27, 2012 in Hot Gossip!, NEWS

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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?

Sources: South China Morning Post, Oriental Daily via ihktv.com

This article is written by Lance for JayneStars.com.

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29 comments to TVB Argues Hong Kong Market Cannot Support New TV Stations

  1. jayne says:

    CTI appears to be standing on risky ground. Ricky Wong had even sold his other company holdings to increase cash flow for CTI and spent millions on producing dramas that may not be aired next year.

    The government appears to be stalling and not a good sign that it is ready to approve the free TV broadcasting licenses.

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    • mito replied:

      Broadcast rights can worth billions, of course usually associated with live telecast of sports,

      CTI can export its drama even without HK license right?

      I wonders if there really any real money on free TV ads these days, unsure for HK

      Login or Register before you can reply to mito
      • Kidd replied:

        Yes, CTI can export its dramas even without HK license. They can even sell their dramas to other HK channel who has license. This can be a back up plan. But, from Ricky Wong’s interview with RTHK, I gather that this is not his vision. Ricky hopes to bring up the TV industry in HK to be on par with other countries that has passed HK such as South Korea.

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      • RAYLEILAFAN replied:

        If Ricky’s aim is to be on par with KDramas he should recruit very good looking+young artistes and scriptwriters who can write for untapped HK youth market and youth market of Asia instead of getting old green leaves from TVB to be leads in CTI. Bernice is already looking old and Frankie was a had been. Ricky also import Taiwan youth instead of scouting for fresh HK face to his youth vampire drama.

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      • RAYLEILAFAN replied:

        While TVB has found Him Law, Oscar and Eliza to be their next generation, CTI is banking on mostly middle aged supporting actors. South Korea dramas bank a lot on their pretty young faces and fresh story themes combination. CTI should scout for good looking and young new artistes with potential to get on par with Korea who has a lot of young entertainers and more keep coming every year and their dramas are always exciting with competition between KBS, MBC, SBS. That’s why their industry keep going strong among Asian youths and women.

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      • so? replied:

        CTI hired a lot of new talent, the other familiar people were are just the start. He wants faces the HK audience are comfortable/familiar with but he has signed up alot of fresh talent to meet the various age groups in the market. You should read the other articles before passing false perceptions.

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    • kittykat replied:

      Wow… this is like a BULLY from TVB…. and the HK Government should not succumb to their pressure of not granting license to CTI. This is a free market and free market creates healty competition thus, allows each company to improve the quality of their shows from time to time. Being the monolopy will only make TVB complacent and having another TV station will create more job, not only for the artists, but for the supporting staff as well. If the HK Government have any sense at all, they should approve the licesence to CTI asap.

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  2. AC says:

    I don’t like how Lee tries to make it seem like employee benefits might be taken away, but I do think he makes a very good point about the advertising revenue by using real figures and admitting that their higher profits is at the expense of ATV. Their rate seems to be pretty flat instead of upping their price even though they know they’re the main HK channel.
    Also, whenever I read something about Norman Leung, he seems to be doing a nice job ever since he officially stepped into his position. I prefer him over Mona Fong.

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    • mito replied:

      Thanks to CTI, TVB staff now properly enjoying some interim benefits, unsure if reduce work hours means reduced potential salary

      Hmm, Norman Leung see doing all the great annoucemmet, new investment over Taiwan, bonus

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  3. Mick says:

    Competition is always a good thing. TVB held the monopoly for too long.

    Login or Register before you can reply to Mick
    • ding replied:

      that’s right, monopoly is not a good thing, wealth in the hands of a handful of ppl only? that’s not good, how much will the rich use? only save in the bank and the money does not go round, very bad for the economy, everybody has family to support, moreover competition breeds improvement, why is tvb so fearful of this new co? afterall, they beat atv, afraid of …?

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      • so? replied:

        Agreed. The government should approve the license and let more of its citizens have access to more job openings with the different stations around. CTI hired a bunch of new actors aside from just recruiting old, they are joining the familiar with new recruiting talents, crew, working class and offering more skills training and education for everyone in the process. They have done just as much for the HK people as TVB. They deserve to be granted a license.

        TVB treated its staff horribly and the conditions only improved with the arrival of competitors. Competition takes monopoly out of the picture, giving audience more choices, create more jobs, bring in better conditions, drawing in more innovation.

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  4. Ric says:

    Things are not looking good for CTI right now. It’s been so long and there is still no definite response by the government regarding the license. If the government is still stalling after CTI has already began building production facilities and and filming dramas, it likely means they are strongly reconsidering the approval of new licenses. I don’t think TVB has a good argument. TVB has a virtual monopoly and CTI would not likely take that much revenue away from TVB in the short run. ATV doesn’t have much revenue and will probably risk bankruptcy if CTI succeeds. In the end it will probably still be two stations. One city certainly cannot support that many tv stations but ATV’s share is minuscule and negligible so it should be fine.

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  5. Funn Lim says:

    Of course it can! It is just TVB can’t support rivals.

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  6. so? says:

    If they can manage to produce quality shows, there will only be more investors and advertising. There are many brands that don’t care to advertise on TVB cause they dislike the station. This is a station that makes billions in revenue and its not enough? How much more do they want? The market is big enough and will only grow with more TV stations to attract all kinds of different domestic and foreign advertising. They need to look at the growth of the market. If they stifle competition, HK won’t benefit in the long run.

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  7. Terminator says:

    Wow, TVB and ATV actually working in tandem against a common enemy.

    While ATV taking on Wong directly, accusing the latter of foul play, TVB is taking a “big picture” approach to argue against an additional TV network.

    Login or Register before you can reply to Terminator
  8. TVBfadan says:

    Of course, TVB being the big brother as always. Love what they do but sometimes they take it for granted…

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  9. miriamfanz says:

    Get rid of ATV and give some real competition to TVB so that audience can enjoy more and better TV series.

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  10. Bubblez says:

    ATV broadcasts some of Korean dramas too though. =_=

    And I think having ATV, TVB and CTI is good because it allows the viewers to have more options instead of just one mainstream channel.

    Login or Register before you can reply to Bubblez
  11. Nicole says:

    Gosh, stop threatening their own staff with the loss of “benefits”. TVB’s behaviour is deplorable. Without the threat of CTI and other TV stations hanging over their heads, I doubt TVB would think of implementing those “benefits”, which everyone else in most industries will take as our bread and butter.

    To be frank though, Hong Kong doesn’t have the population to support 5 TV licenses.
    But kick out ATV and let TVB get some real competition from CTI.

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  12. Kidd says:

    Ricky Wong should hold a press conference to counter argue Mark Lee’s arguments. He gave quite good arguments here.

    http://programme.rthk.org.hk/channel/radio/programme.php?name=radio1/Free_as_the_wind&d=2012-10-25&p=3173&e=195271&m=episode

    This is Ricky Wong’s interview with RTHK regarding the current TV business in HK.

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  13. sushiroll says:

    I noticed a lot (and i mean a lot, like boatloads of asylum seekers) have defected to CTI. All those old, fat, ugly veterans and kelefares-don’t know their names but i sure recognise their faces.

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  14. sushiroll says:

    wait so whats gonna happen to all those artists who signed up for CTI? Are they even getting paid as we speak?

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    • Kidd replied:

      Yes, they are getting paid. Some artists who has crossed over has mentioned this before. But, I worried how long Ricky Wong can keep this up if the government doesn’t give him license in the near future.

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      • so? replied:

        I think he will eventually get it, you know why? Because the demand is there. They want to grant the licenses, they were the ones who proposed it and that is why Ricky pursued this venture. The problem came when TVB and ATV sent legal representatives to argue a case against it and hassle the government, which is why the government is stalling to give a response. They are figuring out a way to deal with TVB and ATV.

        From the sacrifice Ricky made, we know his goal is genuine, and the lengths he will go through to bring better change to HK, he has a rare character, rather than hold on to his wealth, he uses it to benefit the whole of HK for generations to come. I think he has the character to succeed on bringing HK entertainment to another level. He is giving so much of his wealth back to the HK ppl and culture in the process. I believe the government is on his side but they know they have to carefully sort everything out.

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  15. june says:

    i can’t even with tvb’s argument…and i’m curious as to why the consideration for the cti’s license takes up to three years…what’s this thing about the ‘legality’ of granting more licences for free broadcast while tvb’s license still remains? what’s that got to do with anything? can someone explain?

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    • you can't even what replied:

      you can’t even what….agree? disagree? but yeah tvb lol

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  16. you can't even what says:

    you can’t even what….agree? disagree? but yeah tvb lol

    Login or Register before you can reply to you can't even what
  17. phd says:

    support new tv stations!

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