The 2012 HK Television Wars: A Detailed Look at the Free-to-Air Licensing Process + Latest Updates – PART 1

As promised (to those whom I’ve been consistently chatting with about CTI and the whole free TV license thing), here is the latest article that ND Daily published (just last month) about the HK television industry’s upcoming free-to-air TV battle.

This is a VERY interesting read (not to mention extremely well-written) because it outlines in detail the process for obtaining a free-to-air TV license in HK and also attempts to understand why there has been such a huge delay in the 3 companies (CTI, NowTV,i-Cable) obtaining their licenses.

I will have to say though that the article is sort of written from CTI’s perspective (especially the second half of the article), but that’s actually not surprising given the fact that CTI has been the most vocal of the 3 stations up to this point. Not sure if this will have any effect on people reading this article….it doesn’t affect me personally, but since there are a lot of ‘CTI haters’ – for lack of a better term – out there, I figured I would make this point clear just in case.

Due to the length of the article (it is VERY long), I only translated and posted up Part 1 for now – I’ll get part 2 up within the next few days. Luckily, the two parts of the article are somewhat independent, so they don’t have to be read together. Part 1 outlines the free TV licensing process and touches upon why it’s taking close to 3 years (!!) for this process to take place while part 2 consists primarily of interviews with CTI’s management and artists regarding their thoughts on the issue.

Lastly, in case anyone is interested….

Here are a couple links to the press releases that the government issued in May 2012 related to the free-to-air licensing issue. Sure, there’s a lot of legal (and business) jargon in the press releases, but if you filter those out, they provide a pretty thorough outline of the process. I’ve also included the link to a news article from the government’s website (also published in May 2012) that provides a good summary of the 2 press releases.

News Article from May 2012: http://www.news.gov.hk/en/categories/finance/html/2012/05/20120530_141435.shtml  
Press Release 1:
http://www.cedb.gov.hk/ctb/eng/press/2012/pr30052012.htm

Press Release 2:
http://www.info.gov.hk/gia/general/201201/11/P201201110369.htm

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ND Daily Exclusive: When will the Free-to-air TV War Truly Begin?

Source: ND Daily News -- Part 1

Translation: llwy12


Article originally published 9/14/12

In March of this year ND Daily published a series of articles entitled “HK Television New Revolution” 《香港电视新风暴》that took an in-depth look at each of the ‘players’ in the upcoming HK free-to-air TV station war. Seven months later, this ‘war’ still has not officially begun.


With the new free-to-air TV licenses still not issued yet, there are rumors that one of the 3 contenders for the license – Ricky Wong’s City Telecom (CTI) – may be the most severely impacted. Recently, construction on CTI’s brand new multi-million dollar mega TV and Multimedia Production Center in Tseung Kwan O was halted, leading to panic and speculation that the company might be in financial trouble.

In this exclusive report, ND Daily’s reporters will attempt to ‘chase down’ the reason behind the delay in issuing the free-to-air licenses and also thr0ugh our interview, ask Ricky Wong to respond to the various rumors surrounding his company and the licensing issue.


Part 1: The reasons behind ‘holding’ of the free-to-air licenses


Based on our [ND Daily reporter]’s understanding, the process for obtaining a free-to-air television license consists of the following steps [TN: these steps are accurate, as they are also confirmed in various press releases from the government]:

.1) Interested parties submit their application for a license

.2) Await a 2 month Public Consultation period [in which comments and opinions from the HK general public are gathered] as well as a Communications Authority (formerly Broadcasting Authority) Assessment period [in which the CA determines if the applicants meet all the criteria outlined in the Broadcasting Ordinance]

.3) The Communications Authority submits its approval and recommendation to the Chief Executive in Council [aka the HK government] to grant the licenses.

.4) The CE in Council reviews the recommendations and issues the licenses.


Back in 2009, three companies – City Telecom Limited (CTI), Fantastic Television Limited (i-Cable), and HK Television Entertainment Company Limited (NowTV) – submitted their applications for free-to-air licenses to the Communications Authority (formerly known as the Broadcasting Authority). Subsequently, the Communications Authority conducted a public consultation period [from July to September 2010] in accordance with the requirements under the Broadcasting Ordinance. In May of 2011, the Communications Authority ‘approved’ the issuance of the licenses and submitted their ‘recommendation’ to the Chief Executive in Council to approve and issue the licenses. Based on this ‘news’ (back in May 2011) that the licenses had been ‘approved’ and will soon be issued, the 3 companies that applied (CTI, NowTV, i-Cable) started preparing to enter the free-to-air television market by recruiting artists / behind-the-scenes crew as well as financing various related projects [i.e. building studios, investing in filming locations, etc.]. Amongst the 3 companies, CTI – under Ricky Wong’s leadership – was the most aggressive, as they launched a massive ‘poaching’ mission that resulted in more than 100 artists and behind-the-scenes personnel joining their company.

Throughout this process, strong objections to the issuance of the free TV licenses from currently existing free TV broadcasters [TVB and ATV] never stopped – in fact, these ‘objections’ played a major role in the ‘delays’ that occurred in the license issuance process.

Ironically, with all the ‘drama’ and controversy surrounding the issuance of free-to-air TV licenses to the 3 new companies, it’s almost like watching a long serial TV drama, complete with climaxes and all. Every time there’s word from the government that the ‘issuance of the licenses is imminent’ and the TV industry prepares to ‘go to war’, it turns out to be a ‘false alarm’ – each time, the ‘war’ never makes it off the ground.

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In February 2012, CTI held a grand ‘ground-breaking’ ceremony marking the start of construction for its planned 500,000 square feet TV and Multimedia Production Center in Tseung Kwan O. That day, CTI’s chairman Ricky Wong (who is known for his ‘high-profile’ ways) announced that he “already received official notification that the Broadcasting Authority [now known as the Communications Authority] has approved the issuance of their free TV license – it is anticipated that the official announcement to the public will be made in the next month or two!”

It has been 7 months since Ricky Wong made his ‘declaration’. Throughout those months, Mr. Wong has continued to hold various events every other month or so to ‘show off’ the artists and other personnel that he had recruited – his confidence that the government will ‘issue the licenses soon’ has been unwavering. On September 12, 2012, over 140 artists and behind-the-scenes personnel as well as CTI’s top management gathered at the W. Hotel in HK for a poolside party to celebrate CTI’s 20th anniversary. At the party, when Mr. Wong was once again asked: “When will CTI receive its free TV license?”, his response was markedly different from the strong ‘declaration’ of confidence that he had given in the past: “You’ll need to ask the HK government!”

It has already been more than 1000 days since CTI submitted their application for a free-to-air TV license (they submitted their application on New Year’s Eve of 2009). As CTI’s management, artists, crew, as well as audiences concerned with when the licenses will be issued still continue to wait….wait…wait, various ‘rumors’ related to CTI’s finances continue to surface. Earlier, there were rumors that CTI halted construction on its massive TV studio for 1 month and management was scrambling to implement numerous ‘expense control’ methods, leading to ‘hesitation’ from some artists who were planning to ‘jump ship’ to CTI – in addition, these ‘rumors’ led to widespread speculation that the government will not issue the licenses after all.

During CTI’s 20th Anniversary party, ND Daily’s reporter once again interviewed Ricky Wong as well as a bunch of CTI’s artists and behind-the-scenes crew to find out their thoughts on the free TV license issue and also understand how CTI plans to manage its quickly growing expenses during this ‘waiting’ period. In addition, based on research gathered from various sources, we [ND Daily reporters] will attempt to understand the reasoning behind the delay in the issuance of the 3 free TV licenses.


Obstacle #1: ATV files legal challenge against issuance of additional free-to-air licenses, resulting in a 6 month ‘tie-up’ in court

At the party, our reporter asked Mr. Wong: “Why is it taking so long for the licenses to be issued? Throughout the process, what is the biggest obstacle you have encountered?”, to which Mr. Wong replied: “Because ATV filed a legal challenge with the government, we ended up in a ‘court battle’ for 6 months!”

In reality, ATV has been opposed to the issuance of the 3 addition free TV licenses from the beginning. Fearing that they will lose out to the impending new ‘competition’, ATV had issued a written objection letter to the Broadcasting Authority back in September 2010 in which they stated that issuing additional free TV licenses is unfair to ATV and would have a negative impact on them – in their letter, ATV also requested that the BA delay their plans for issuing new licenses until 2015. In May 2011, when HK Media reported that the Broadcasting Authority already made the decision to recommend to the Chief Executive in Council that all criteria has been met for the licenses to be issued, ATV immediately launched a request to ‘appeal’ the decision, using the Broadcasting Ordinance as their basis. When their request to appeal was denied by the courts at the end of 2011, ATV then waited until the very last day of their appeal period to submit a request for ‘judicial review’ with the higher courts. In March 2012, HK’s higher court system issued a statement indicating that the Broadcasting Authority’s ‘recommendation’ for the CE in Council to issue the free TV licenses was merely a ‘suggestion’ that has no legal binding whatsoever; also, since the licenses have not been issued yet, ATV’s interests have not been directly harmed – therefore, the request for ‘judicial review’ of the BA’s recommendation is ‘unwarranted’ at this point in time. They suggested that ATV should instead wait until the CE in Council [aka the HK government] actually announces the decision to issue the licenses before considering further [legal] action. ATV responded that they are still discussing internally whether they will continue to appeal.

Ricky Wong candidly stated that ATV’s numerous ‘legal challenges’ played a huge part in delaying the process of issuing the licenses – luckily though, the government [via the courts] already ‘eliminated’ this obstacle earlier in the year [by rejecting ATV’s requests for appeal and judicial review].

Even though one obstacle was ‘eliminated’ (for now), another one was waiting in the woodwork – this time, the ‘obstacle’ came from the company that, up until this point, had been asserting to the public that they ‘welcome fair competition’: the HK television industry’s ‘Number 1 Brother’, TVB.


Obstacle #2: TVB criticizes the ‘lack of transparency’ in the [license issuing] process and ‘claims’ that the pie is not enough to share.

On May 17, 2012, TVB executives held a closed door investors meeting – not long afterwards, TVB’s General Manager Mark Lee (李宝安) ‘blasted’ the Broadcasting Authority, claiming that the free TV license review and approval process ‘lacked transparency’. TVB also indicated that for the past 15 years, the advertising market for free-to-air television in HK has remained at approximately 3 billion HKD – if the free-to-air TV stations were to increase from 2 to 4 or 5, there is a possibility that the current TV stations would be forced to close down. Mark Lee made it clear that he [on behalf of TVB] hopes the government will clearly consider the issue and that if TVB’s interests are ‘unfairly threatened’, they will not hesitate to take legal action.

Up to this point, TVB had taken an ‘unperturbed’ approach to the situation, but in reality, they could no longer just ‘sit back’ and observe. Just as it appeared that the issuance of the licenses was imminent, TVB decided to ‘join the battle’, even ‘teaming up’ with ATV’s management to criticize licensing process – both current stations adamantly expressed that the HK television market cannot handle 5 TV stations and requested that the government conduct another ‘public consultation’ exercise [to once again gather comments / opinions from the public]. In an unexpected and surprising ‘twist’, one of the 3 companies also waiting for a free TV license – i-Cable (Fantastic Television) – also jumped into the fray: i-Cable’s management also voiced their opinion that the government should indeed conduct another public consultation exercise in order to reduce the possibility of current stations requesting ‘judicial review’ of the process later on.

While all this was going on, Ricky Wong was in the middle of leading his company in another ‘grand display’ of his artists and series that already started filming. Asked about encountering yet another obstacle to the issuance of his free TV license, Mr. Wong could only helplessly reply: “Perhaps it’s a good thing for the licenses not to be issued so quickly – it allows us to accumulate another 200-300 hours of programming first!”

When he was interviewed at the 20th anniversary party, Ricky Wong once again emphasized: “For the issuance of the licenses, the final decision rests with the Chief Executive and his Council. To be honest, all of the legal procedures have already been completed and the Broadcasting Authority already recommended for the government to issue the 3 licenses. Recently, I have not heard the Communication Authority announcing any changes to their decision.”


Obstacle #3: Timing issue with the government changing hands (new Chief Executive and Council in government) leading to more cautious and thorough review of the licensing documents.

As for the 3rd obstacle in the license issuance process, Ricky Wong helplessly stated: “After a 6 month court battle, just as the government indicated that the issuance of the licenses would be imminent, we encountered yet another challenge – the government changing hands!”

Mr. Wong indicates that fighting this free TV license battle has pretty much been an ‘uphill’ one. In April of this year, Ricky Wong announced that he would be selling the telecommunications portion of his business (the ‘core’ of his company) for 5 billion HKD, which included the telecom and broadband segment of the business that he had personally ‘brought up’ for 20 years. Asked about his decision to sell, Mr. Wong indicated that with all the legal challenges overcome and ‘rumors’ from the government that granting of the licenses could become a reality very soon, he wanted to ‘prepare’ by making sure that he had enough cash onhand, since building a TV empire is a very expensive business. Unfortunately, just like in the previous instances, the ‘rumors’ were just that – rumors! Once again, CTI and its staff found themselves in another familiar position: indefinite waiting.

After that, the time came for the government to ‘change hands’. CTI’s television department head of directors (also formerly TVB’s labor union chairman) Lau Shun On (刘顺安) told ND Daily’s reporters: “Due to the Chief Executive and Council changing hands, then the legislative council elections, the new government didn’t have time to deal with the free TV licensing situation. Most of our communication up to this point was with the previous government officials, but timing-wise, things got delayed. In addition, due to the objections from TVB and ATV, the new government taking over now has to address their concerns – in order to do so, they have to study the documents all over again….we believe this is the primary reason for the issuance of the licenses to once again be delayed.”

Recently, the HK Media reported that it is rumored the government could issue the licenses as early as October – when ND Daily’s reporter asked Ricky Wong about this, he told them to go ask the government instead: “Hopefully the licenses can be issued within the next 2 to 3 months. I have confidence that the government won’t deny the licenses!”