Big television shake-up in Hong Kong as the government approves initial permits for two companies to obtain the highly coveted Free-to-Air broadcast license. The last time a Free-To Air broadcast license was granted in HK was nearly 40 years ago, to a company named Commercial Television Ltd., which went out of business 3 years after.
The initial approval for the FTA licenses was won by and I-Cable (Fantastic TV) and PCCW, (NowTV), which is one of the largest IPTV providers worldwide, and the first to pass the 1 million subscriber mark nearly four years ago.
While both PCCW and I-Cable shares jumped on the news, Hong Kong Television Network Ltd. (HKTV, Wai-kay’s Hong Kong Television Network), saw its shares dropping more than 31% and said they will cut 320 jobs after its FTA permit application was rejected.
According to sources at SCMP:
A senior government source said a consultant’s report had shown HKTV, previously known as City Telecom, to be the weakest applicant, and that Exco approved the licences “on merit with no political considerations”.
But the rejection of HKTV’s application, which was against the Broadcasting Authority’s earlier recommendation that all three licences be granted, prompted a swift backlash. By 1.30am today, a Facebook page calling upon the government to issue a licence to HKTV had attracted some 256,000 “likes”. Internet users were also preparing a protest on Sunday.
Asked if the deviation from the Broadcasting Authority’s recommendation would be against procedural justice, So said the authority made recommendations not decisions. He said Exco had considered “a basket of criteria” including programme planning, technical soundness, investment and public opinion.
But he refused to explain why HKTV was considered inferior to its competitors. HKTV can’t appeal to Exco against the decision, but it can file a judicial review in court, he said.
Meanwhile, Hong Kong already has two FTA broadcasters (TVB and ATV), both are now challenging the government about why two contracts were awarded at all. They both fought against the governments consideration of 3 potential new licenses, and it seems that they at least for now, won the battle against Ricky Wong’s HKTV, (formerly called City Telecom, and now called HKTV, Wai-kay’s Hong Kong Television Network).
According to Bloomberg:
“We estimate new operators could launch the free-to-air TV services within 6-12 months and new competition could start as early as 2014,” Mandy Chan, an analyst at Merrill Lynch, wrote in a report. “We expect TVB to face challenges in keeping its near monopolistic hold of the Hong Kong free-to-air TV market.”
The awards to I-Cable’s Fantastic Television Ltd. and PCCW’s HK Television Entertainment Co. will double the number of free-to-air TV operators and bring in more investment, Commerce Secretary Gregory So said yesterday.
“This will not only provide more program choices for the audience, but also create more job opportunities in the creative industries,” So said at yesterday’s briefing.
Television Broadcasts’ flagship channel has a 93 percent audience share during prime time on weekdays, according to the company’s 2012 interim report.
Both TVB and ATV’s FTA licenses are due to expire in 2015, forcing them to re-apply in order to maintain it. Ricky Wong, the Telco entrepreneur in charge of Hong Kong Television Network (HKTV) denied that he will re-apply for an FTA license or acquire either TVB or ATV at that time.