Thursday, April 20, 2017

HK Television Wars - newest update

As further followup to my previous 2 posts about the "HK television wars" and the state of the television industry, I wanted to share the latest "hot off the press" news about something I had mentioned in those posts:  the fate of i-Cable.

As previously stated, i-Cable's parent company Wharf Holdings had announced that they were no longer going to invest any more funds in the company, which meant the fate of the station's cable network as well as newly acquired free-to-air TV network hung in the balance.  There had been rumors that Forever Top's David Chiu -- who had already submitted an application for a free-to-air license and was still awaiting the government's decision -- was interested in buying the station.  This rumor went on for weeks and now finally, it has been confirmed.  David Chiu has agreed to invest funds in i-Cable, which means he will own about half the company and therefore become a decision-maker in the station.  The article below has more details, so I would say go ahead and read it, but one thing I found interesting that I wanted to point out was the fact that David Chiu stated he already told the government to put his free-to-air license application on hold until they sort everything out with i-Cable.  This actually makes perfect sense, since i-Cable already has a free-to-air license so if he takes over the station, he essentially won't need another one, though not sure at this point what he plans to do with Forever Top -- it sounds to me that both will function as separate entities, but right now, it's kind of too early to tell.  I guess we still have a few weeks to find out, as I'm assuming that there will be a little more clarity by the time i-Cable's free-to-air channel Fantastic TV launches on May 14th.


News article:  i-Cable down 21 pc despite white knights ride to rescue with plans for expansion

Source: SCMP

Troubled pay-television provider i-Cable Communications dropped 21 per cent on Friday morning as it resumed trading after announcing that it had found a white knight.

Shares of i-Cable dived to 46 Hong Kong cents shortly after market open, down 21 per cent from its previous close of 61 Hong Kong cents. The company had suspended trading for three days pending the release of an announcement that involves “inside information”. By 10am, shares had erased some losses and fallen 13 per cent to 53 Hong Kong cents.

The decline came after i-Cable announced Thursday night that it had been rescued by a consortium of white knights led by property tycoon David Chiu Tat-cheong together with New World Development chairman Henry Cheng Kar-shun and others, who plan to use the broadcaster as a foundation on which to build a new media company.

“The share price dropped as the market is not sure if the HK$1 billion injection is sufficient to help with a turnaround for i-Cable, which has suffered losses for many years. In addition, the rescue plan involves right issues which require existing shareholders to pay for the offer of shares. That is not welcomed by investors,” said Ben Kwong Man-bun, director of KGI Asia.

But Kwong said the future share price of the company should become more stable with the help of the white knight.

“It all depends on what the next business plan of the new buyers will be. If the white knight has a good development plan for i-Cable, it would be positive for the future of the company.”

In a statement late on Thursday, Forever Top said it had agreed on a deal with i-Cable’s parent, Wharf (Holdings), for an equity injection of HK$1 billion to strengthen the broadcaster’s financial position.

In addition to Chiu, other backers of the consortium include New World Development chairman Henry Cheng Kar-shun, Guangzhou R&F Properties chairman Li Sze-lim, John Zhao Huan, president of private equity firm Hony Capital, and conglomerate Chow Tai Fook Enterprises.

Chiu is the second son of Deacon Chiu Te-ken, who founded ATV, the free-to-air broadcaster that went off the air in May 2016.

Under the agreement, about HK$704 million will come from an open offer to existing shareholders, fully underwritten by Forever Top. A further HK$300 million will come from the conversion of debt due to Wharf into an equity stake in i-Cable.

An open offer allows existing qualifying shareholders to increase their stake in the company.

According to a filing to the Hong Kong stock exchange, five shares will be offered for every three existing shares held by qualifying shareholders at 21 HK cents each.

Following completion of the offer, Forever Top will hold 40 to 54 per cent of i-Cable’s issued share capital, depending on the take-up of the offer by the public shareholders.

“Upon completion of the transaction, Forever Top will use i-Cable as the platform to drive its media business,” Chiu said in the statement.

“Hong Kong has been known as Hollywood of the Orient and I believe television talent, whether back-stage or front-stage, are abundant here. I am hoping that all these talent will be given the chance to bring into play in the most flexible manner of co-operation with i-Cable.”

He also said Forever Top would strive to strengthen the scope of financial news in the region as well.
The announcement comes just in time to save i-Cable and its 2,176 employees from the axe.

Last year, i-Cable made a loss of HK$313 million and Wharf had indicated it would cease funding the broadcaster and exit the unprofitable business of providing pay television and broadband internet.

The Communications Authority had said i-Cable must fulfil its financial responsibilities before its pay-television licence matured on May 31.

“With the new equity injection, i-Cable’s capital structure and operation outlook will be significantly improved – increased equity, reduced debt and possibly expanded services,” Chiu said.

Forever Top, which had previously applied for a domestic free-television licence, said in the statement that it had requested the Communications Authority put on hold the processing of this application until the outcome of the equity injection into i-Cable became clearer.

The injection plan will require approvals from the independent shareholders of i-Cable, the Securities and Futures Commission, the Hong Kong stock exchange and the Communications Authority.

Forever Top said it hoped the deal would be completed in September.

Trading in i-Cable’s shares was suspended on Tuesday, pending the result of an announcement.

In a statement to the stock exchange, the firm said it had applied for trading to be resumed from 9.30am on Friday.


  1. Do you know more about the background of David Chiu. In the article it said that his father has founded ATV, but there's no more information about him.

    1. @Anonymous: There’s actually quite a bit of info out there about David Chiu. He’s the second son of Deacon Chiu, who was the Chairman of ATV back in the 1980s. From what I understand, David Chiu is a real estate and hotel developer with a background in hospitality (managing hotels). He is currently chairman of Far East Consortium, a company that does property development and hospitality at its core. In 2015, he suddenly announced his intention to establish a TV station and apply for a free-to-air TV license. The station he ended up establishing is Forever Top, which is actually a consortium that he formed in partnership with gambling tycoon Stanley Ho’s daughter Pansy Ho. In his press conference/release, he had talked about his father Deacon Chiu’s accomplishments at ATV back in the day and seeing the state of the television industry nowadays, he felt that he needed to do something to bring HK audiences back to supporting free-to-air television industry. Of course, whether he is sincere or not about this remains to be seen, as I had never heard his name until 2 years ago when he held his press conference and most of what I know about him is based on what I’ve researched, so not sure how much of it is valid. With that said though, one thing I will say is that in observing his actions the past 2 years related to the free TV license issue, he gives me the impression of being smart and knowing what he is doing. So far, he hasn’t made any of the missteps that Ricky Wong made (which, as much as I still support HKTV, I feel RW’s approach had a lot to do with why he was refused a license) and seems to be taking a more measured approach to the whole thing. I’m interested to see how this all plays out in the end and whether he will continue to pursue a license or focus instead on developing i-Cable.

    2. Thanks for the information!

      Does his family (or he) has a lot of money? Without money you can't run a business.

    3. @Anonymous: I don't think money will be an issue. David Chiu is rich, plus he's not doing it alone. The consortium actually consists of 2 other tycoons as well, with one of them being the family that owns Chow Tai Fook jewelry store. One of the tycoons is the third richest man in HK so there's plenty of money for them to work with.

  2. Just to clarify, i cable has a paid TV license not a free to air one. The free to air one is under the name of fantastic which is a separate entity to icable (even though they are under the same owner). So even if David Chiu buys iCable (pending the decision of shareholders) he still won't have a free to air license.

    1. True, both are technically separate, though owned by the same company. On paper, it makes sense that it shouldn't affect, but hard to say in reality whether it will or not. There is also brand reputation to worry about....if the deal ends up not going through (which there still a possibility since there are a bunch of approvals still needed), the only other alternative is for I-Cable to close down their pay TV division. For a company like TVB who already has established free TV, closing pay service is not a big deal, but for for I-cable, it's their bread and butter, so it's hard to say what impact it will have on the free TV side of things for them.

      David Chiu and I-Cable both said the deal won't be finalized until September at the earliest, which is probably why they are applying to the government to have I-cable's pay TV license expiration date extended (current date scheduled for end of May). In that case, looks like a decision from the government on the free TV license applications won't happen anytime soon...

    2. I was always under the impression that iCable would be going ahead with the free to air license regardless of whatever happened to their pay TV division and they had already prepped for the launch of Fantastic TV in May. The logical thing to do would be to close down the pay TV branch of iCable and just rehire all their staff (well probably cut some) to work on Fantastic TV. The pay TV division is losing a lot of money anyway. David Chiu is essentially saving the iCable pay TV side and using it for financial news etc.

      Well we all know the government is never going to approve any more free TV licenses anyway, and even if they eventually did it'll probably be like 2019 at the least since they are so slow with everything. The current deal is that the small shareholders need to approve of David Chiu's investment first before they even consider extending the pay TV expiration date (at least thats what I understand). David Chiu's original free TV license application is what is on hold.

    3. @Phixster: Yes, I believe your understanding is correct and all your points are valid. However, I think one reason why people are worried is because of the implications of shutting down their pay service when that has been their "bread and butter" all along and their free-to-air service is not established yet. TVB actually did the same thing in that they shut down their pay TV service to cut their losses and returned their pay license to the government, but in their case, it makes complete sense to do that seeing that their free TV service has already been established for 50 years -- they can shut down a division that is not performing, shift those resources to free TV side, and possibly recoup the losses in a few years. With i-Cable, if they shut down pay TV, they can still shift their resources to free TV, but then the pressure is on to gain audience share right away and recoup their losses to cover operating expenses, which is nearly impossible first year (supposedly it takes 5 to 10 years to break even and turn a profit when it comes to TV stations). ViuTV has been in existence for a year already and they are still struggling.

      By the way, Fantastic TV filmed their opening ceremony today and did a sales presentation of sorts for their programs. To be honest, it doesn't look too promising that they will make much of an impact the first year. HK audiences are really big on name recognition, which is why even ViuTV made the effort to recruit as many "big names" as possible to support their launch and participate in their programs. The biggest name at Fantastic TV's sales presentation yesterday was Chapman To (who I would hardly consider even B list artist). With that said though, it does sound like they are taking a page out of ViuTV's book in that they are not signing artists to their station but rather working with artists freelance as the need comes up. There are a few artists who will be running back and forth between ViuTV and Fantastic TV, filming programs for both.

  3. Has anyone watched anything from Fantastic TV? They started airing already but there's not much news about it.

    1. Yea...they had a bit of a disastrous launch. Turns out a large segment of the population couldn't tune in...audiences flooded their Facebook page. And their launch series are Korean series that already aired on Viu TV earlier and a Mainland series starring Raymond Lam that already aired several weeks ago there. Definitely didn't start off on right foot.

    2. Oh, also, I read that unlike ViuTV, Fantastic TV actually did not have an official launch ceremony and instead chose to air that sales presentation thing that they had recorded a few weeks back. Supposedly they are trying to keep everything low-key because of the whole financial issue thing with their mother company (i-Cable and Wharf).

      To be honest, I don't have much confidence in Fantastic TV. At least ViuTV had some promise with 1 self-produced series right off the bat and a few attractive variety programs. Fantastic TV is basically launching "quietly" with a lineup of variety programs and purchased series from Korea and Mainland. They have 2 self-produced series in the works right now, but filming isn't complete yet, plus based on the info out so far, looks like both series will be geared toward younger audiences (both series are about love relationships between younger folks). Not sure when they are going to air these series though. And I honestly think it's dumb that they are choosing to air series that ViuTV already aired earlier -- do they really expect audiences are going to tune in to watch the same Korean series again on a different channel, especially if the series like just finished airing a few months ago?

      Also, all the connectivity issues they had on the first day did not help. When more than a third of the population you are trying to reach can't even access your channel (like literally the channel didn't exist) and the only way audiences are able to reach you is to flood your Facebook page with complaints, that is not good at all....

  4. That's unfortunate. I honestly see the whole thing being sold soon, especially if the icable sale doesn't go through and they close it down