TVB may tap partner for Galaxy

Pay TV venture granted a license, but market not optimal

HONG KONG — TVB, Hong Kong’s dominant terrestrial broadcaster, hinted Monday that it might have found an investor to take a stake in Galaxy, its local pay TV subsidiary.

Ronald Jones, TVB’s senior manager of business development, told Bloomberg that negotiations with two U.S. media companies and a major Hong Kong-based financial firm are at a very advanced stage.

TVB is desperate to seal a deal. Market optimism has turned to gloom since Galaxy — yet to be launched in Hong Kong — was granted a license to set up a pay TV service in the city in December.

News Corp.-owned Star and Internet content provider have already have pulled out of the pay TV race. Another potential competitor, Taiwanese satellite broadcaster Pacific Digital Media, has put its plans on hold. TVB already has been jilted by one potential suitor: Malaysian satellite broadcaster Measat pulled out of a deal to invest in Galaxy in June.

Galaxy cut down to size

Fearful of TVB domination of the pay TV market, the government hasn’t wavered in its demand that the company cut its stake in Galaxy to less than half. But despite TVB’s dominance, investors seem to see Galaxy as a risky prospect. The Hong Kong market is considered too small to be attractive on its own, and TVB has yet to firm up Galaxy’s connections to the potentially lucrative China territory.

TVB already broadcasts two services in mainland China, and its terrestrial service has a strong following in southern Guangdong province. But at the moment, none of these assets is included in the Galaxy deal.

“I’m skeptical that media companies would have any interest in the market unless it was a way to leapfrog into China — and TVB hasn’t indicated yet that it has access to China, or is willing to share that with a foreign company,” said Andrew Collier, Hong Kong-based media analyst at Bear Stearns. Until TVB clears that up, Galaxy could be playing a waiting game for much longer.

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