Friday, February 10, 2017

HK Television Wars – Latest updates

It has been a long time since I’ve written about the ongoing “war” between TVB and the HK television industry.  Personally, I haven’t really been following TVB news as closely anymore (though of course I haven’t abandoned them completely – kind of hard to after following them for 30 years), but I’ve continued to keep tabs on the HK entertainment industry in general, especially as it pertains to my favorite artists or entertainers I grew up watching.  And yes, I’m also still keeping tabs on the HK television wars (aka the free-to-air licensing issue) to some extent (time permitting of course).

Here’s an update on a few things that have been going on recently impacting the HK television industry and TVB (note that this is NOT all-inclusive of everything that has been going on in the industry lately…I only cover a few things that come to mind):

1)      i-Cable’s free TV arm Fantastic Television finally received their license in hand last year and a few months ago, they held a press conference announcing that they are planning a launch date of May 2017.  As with their usual style, i-Cable’s management team has been super-secretive about their programming content, though what is known so far is that their business model will be very similar to ViuTV (NowTV’s free TV arm, which launched last year) in that their focus will be on variety programs and purchased content rather than self-produced TV series.

To be honest, I don’t get these companies’ mentality.  It doesn’t sound like they are serious at all about competing with TVB.  Everyone and their mothers know how “obsessed” HK audiences are with television series and currently TVB is pretty much the ONLY option when it comes to TV series production.  Doesn’t it make sense then that if you’re planning to launch a new TV station, your first priority should be to produce high quality television series that will  give you a decent chance of pulling in the ratings and audience share long-held by TVB?  I would surely think so!  Yet, both of the TV stations that were granted free-to-air television licenses 4 years ago (gosh, time sure does fly!) have chosen to go the complete opposite direction.  When ViuTV launched last year, they even stated publicly that they are “not  trying to capture TVB’s core audience” but rather, are focusing on those audiences who have abandoned TVB already, with the goal of producing content that will bring these audiences back to watching HK television.  Um, ok….sure, ViuTV, that’s a lofty goal and we appreciate the idea of wanting to bring HK audiences back but don’t you guys think that’s an unrealistic goal given the current environment in HK?  Besides, do you guys truly think that HK audiences who have abandoned TVB are now all of a sudden going to come scrambling back to watch variety programs, reality shows, and Cantonese-dubbed Korean series?  Did the ATV lesson of “how not to run a TV station in HK” teach you guys anything???  Apparently NOT…..

Anyway, back to the subject of i-Cable (aka Fantastic Television) launching soon.  According to recent reports (like literally from yesterday’s newspapers), Fantastic Television – which had put in an application to the Communications Authority last year (June 2016) to grant them some of the over-the-air broadcasting spectrum that ATV had to give back to the government after they closed last year – has now decided to put the broadcast spectrum talks on hold.  The Communications Authority is perplexed at this decision (and rightfully so) because Fantastic  Television won’t be able to broadcast in a free-to-air environment without establishing a terrestrial network, which is what the spectrum does (don’t ask me to explain the details cuz I’m not scientific so not 100% sure how it works).  Basically, without the spectrum, the station would need to purchase transmitters and a bunch of other equipment in order to transmit their signals in the free-to-air capacity, which would mean huge investment on their side.  Frankly, I’m scratching my head on this one as well – I mean, I highly doubt i-Cable has their own broadcast spectrum like HKTV does (which is the reason why Ricky Wong didn’t bother applying for ATV’s broadcast spectrum back when they gave it back to the government last year).  Something doesn’t sound right with this whole thing (the media outlets are actually calling this “a blow to HK’s free-to-air television market”), though who knows what the real story is behind the scenes.  I guess we will have to wait and see what happens in 3 months when the station officially launches.

2)      On the free-to-air license application front, the “big” (albeit “old”) news is that Forever Top (the consortium led by David Chiu – the son of former ATV owner Deacon Chiu – and Pansy Ho) decided to “suspend” their application for a free-to-air license in September of last year.  Their explain was that they need to “reorganize their corporate structure” before deciding whether to resume the application process.  Not really sure what that means, but putting my business hat on, I’m going to make an educated guess that there was either a major change in their executive ranks (i.e. maybe David and Pansy’s companies decided to part ways?) or there was some type of merger / acquisition (or something of that sort)….whatever the case may be, there is guaranteed to be a financial impact in one way or another, which is most likely the “real” reason why they are suspending their application.

So with Forever Top suspending their application, that leaves HKTV as the only other candidate out there with their second application for a license still pending.  I’m pretty sure Ricky Wong is banking on the fact that the new Chief Executive (we will know who it will be soon enough) coming in will be “nicer” to him than CY Leung was and perhaps give him the license that he has been trying to get (anyone want to bet that RW is hoping and praying that John Tsang becomes CE, since he has an amicable relationship with RW and HKTV?).  To be honest though, when it comes to government and politics, there is no such thing as “playing nice” or “playing fair”….doesn’t matter that the former Finance Commissioner was “supportive” of HKTV in the past – once he gets to the CE spot (if he makes it that is), he will need to abide by a different set of rules.  Personally, I don’t think HKTV will ever get their license (and this coming from a huge HKTV supporter) – the political environment in HK right now is toxic and tensions in society are at its highest levels.  With all the issues in the city right now (some of them “life and death” issues), I’m sure that deciding whether to grant new free-to-air TV licenses is low priority.  Besides, if the government decides to deny HKTV for a second time, I’m fairly certain that Ricky Wong and HKTV won’t get the type of mass audience support they got back in 2013 after the first license denial.  I could come up with many reasons to support why but will only cover a few here:  one – a lot has changed in the past 4 years and there are more pressing issues for Hong Kongers to worry about now; second – with ATV gone and ViuTV flopping, most HK television audiences are already resigned to the fact that they will be forever chained to TVB and if they don’t like it, then they can look outside of the city (i.e. China, Taiwan, Korea, Japan, etc.) for entertainment options that fit their needs, since the local alternatives (non-TVB fare) aren’t appealing.  Besides, after seeing how poorly ViuTV is performing, it’s understandable that audiences don’t have confidence that other stations coming in will do any better.  The bottom line is that the “momentum” is not there anymore – HKTV’s best chance of getting a license was in 2013 and maybe 2014 when their series were airing and everything was still “fresh” with audiences…now that 3 years have gone by (and who knows how much longer it will be until the government decides to pick up the license issue again), HKTV has already been largely forgotten.  I hate to say it, but as much as I still support HKTV, I’m not oblivious to the reality of the situation.

3)      In terms of TVB – well, let’s just say that they’ve (supposedly) got challenges of their own to deal with.  Aside from being fined left and right by the Communications Authority for repeatedly violating rules governing product placement and indirect advertising on their programs (which TVB has been fighting the CA tooth and nail), TVB has been trying to fend off unsolicited offers to buy their company.  Just 2 days ago, there was a little known Mainland production company that offered to buy 30% stake in TVB – this while internally, the station’s current biggest shareholder Young Lion Holdings, led by Mainland investor Li Ruigang, just launched a share buyback program that will give themselves an even stronger hold on TVB. 

In addition, TVB decided to return their pay TV license back to the government last month, citing that they’ve been losing money on pay TV service for years now and it is no longer sustainable to be in that market.  They’re also claiming that their 2016 net profit will be down significantly (they are saying it will be down by as much as 55% to 65%) due to declining advertising revenue.  The numbers aren’t out yet so there’s no way to know whether TVB is exaggerating or not, but as a point of reference, from 2014 to 2015, TVB’s net profit went down by 6% (they went from net profit of HK$1.41 billion in 2014 to HK$1.33 billion in 2015).  Ok, I will be the first to admit that I haven’t the slightest clue how much it costs to run a TV station, but um, with the economy the way it is right now, being able to still turn over a profit in the billions of dollars is damn good if you ask me!  Sure, TVB is “making less” than what they made the year before, but it’s not like they are really losing money or operating “in the red” like ATV was doing.  Honestly, TVB should quit their whining over declining ad revenue (and all the other stuff they’ve been complaining about such as audiences’ viewing habits changing to watching series online rather than on the TV) and instead put that energy into producing better programs.  Their reputation has been in the toilet for more than a decade now and things are only going to get worse with more and more entertainment options cropping up globally.  But I guess that’s too much to ask of a company that already has an unchallenged monopoly on the HK television industry….

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