A combination of money, Chinese politics and incompetence has shaken up the boardrooms of Hong Kong’s TV broadcasters.
No. 2 broadcaster Asia Television (ATV) has gone in to meltdown after its entrepreneurial and reformist CEO Ricky Wong was ousted only 12 days into the job.
Engaging in a bout of inheritance planning, centenarian media mogul Run Run Shaw has handed over management of leading free-to-air web Television Broadcasts (TVB) to his 78-year-old wife, Mona Fong.
Meanwhile billionaire Richard Li, owner of phones-to-IPTV giant PCCW, is again attempting to take it off the stock market. But when minority shareholders are not tripping him up, buyers are letting him down.
There’s been talk, too, of i-Cable, the pay TV platform that is fast losing ground to PCCW’s Now TV, being taken private.
All this has resonance beyond Hong Kong, China’s tiny Special Administrative Region, because the broadcasters reach into China and through Asia; and because the maneuvering demonstrates China’s pervasive power — even in a supposedly separate jurisdiction.
Even the Hong Kong government, itself no mean kow-tower to China, expressed its concern over the ATV debacle.
In 2007 ATV’s new owners, the Cha family, lured TVB topper Louis Page to ATV as CEO. He ankled in December after less than a year for reasons he hasn’t disclosed.
On Dec. 4 ATV hired two telco execs with no TV experience to replace him. Wong, the co-founder and chairman of City Telecom, was appointed CEO; while Linus Cheung, CEO of Hong Kong Telecom before it was acquired by PCCW, was appointed chairman.
The omens for the pair were bad from the start.
At their first press conference Wong hesitated to shake Cheung’s hand, suggesting that it would bring bad luck, a reference to Cheung’s management fights at PCCW. Wong, notably, built his career by challenging incumbents.
He quickly expressed his view that ATV, which loses HK$1 million ($130,000) a day, should focus on infotainment, and stop being a pale shadow of TVB or Chinese state broadcaster China Central TV.
This was instantly read as an insult to China and angered advertisers in the Cantonese-speaking mainland region of Guangdong, where ATV is allowed to broadcast and earns 30% of its revenue.
It may also have invoked the wrath of the Cha family, which like all big business groups in Hong Kong, is pro-Beijing.
Within days of Cheung and Wong’s arrival there was a phone-in votes scandal, reminiscent of those in the U.K. and Japan, in which email and text votes cast in the ATV-organized Miss Asia pageant were miscounted.
Several senior exec departures later Cheung called a press conference on Dec. 15 to announce Wong’s resignation, citing “irreconcilable differences” between their management styles.
Wong issued a statement calling Cheung a liar and turned up for work the next day. By Dec. 17 he was officially gone, having pocketed a consultancy for his pains.
Over at TVB, it is unclear what Run Run Shaw is up to. The 101 year old had planned to sell his 75% stake in Shaw Bros., a listed company whose main assets are the largest stake in TVB and a little-used film studio, built at his wife Fong’s urging.
Perhaps taking a reading on Chinese shares, he insisted on a cash-only transaction. But that may have killed the $1.3 billion deal with Chinese property tycoon Yeung Kwok-Keung, who was crunched by the credit crisis.
Now, instead of getting shot of TV, Shaw is plunging further in.
On Dec. 23 he offered $172 million to buy out Shaw Bros.’ minority owners, taking advantage of the low share price, and taking the company private. On Jan. 1 Fong became managing director of TVB.
Meanwhile, PCCW’s Li wants to get out of pay TV and phones to become a press baron and movie mogul.
Unfortunately, his deal-making touch is no longer as sharp as when he sold the infant Star TV to News Corp. in the late 1990s. (Pan-regional Star is one of the few Hong Kong-based TV companies spared the boardroom shambles of its rivals.)
Chinese phones group China Netcom in 2007 waved the nationalist flag and scuppered Li’s deal to sell PCCW to a consortium headed by Australia’s Macquarie Bank.
Last year an attempt to extract phones and media from PCCW, leaving it solely as a property play, was another victim of tough credit markets. Li’s private equity buyer was unable to raise enough leverage at a time when asset values were tumbling.
Now that he is stuck with PCCW, Li has told the stock market that he will take the company private. Last week, Li’s last minute change in the offer price caused a shareholders’ meeting to be postponed. That left the bid in limbo and Li looking ever more unsettled.
A successful bid might have posed a problem in a territory where cross-media regulations are strictly applied. But an astonishing decision by the Broadcast Authority in June ruled that Li is not the voting controller of PCCW and approved his purchase of Chinese newspaper the Hong Kong Economic Journal.
If he really intends to keep PCCW, Li might actually enjoy roughing up i-Cable.
For many years the dominant pay TV player, i-Cable has been overtaken by Now TV in overall subscriptions, though it still leads in terms of paid-for subs.
Now TV’s aggressive pursuit of content has hurt the cable incumbent, which flirted with the idea of taking itself off the stock market.
I-Cable recently warned that competition will rise further with the take-up of digital terrestrial TV, which is now in reach of most of the territory’s population.
But that supposes the new digital channels — operated by none other than TVB and ATV — are more successful than Hong Kong’s third paybox TVB Pay Vision (formerly Galaxy Satellite Broadcasting) which in 2007-08 lost $31 million.