HK Gov’t Reluctantly Explains TV License Ruling

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Newcomer HK Television Network’s bid judged least qualified, 340 jobs lost

The Hong Kong government on Monday attempted to explain its controversial recent decision to only grant two new TV licenses – and to reject the bid from Ricky Wong’s Hong Kong Television Network.

Despite its 2,350 word statement the government shed almost no new light on the bid and said little more than HK Television Network was the least qualified.

The government covered itself by saying that it had explained itself “as far as permitted by the system the assessment criteria” and without disclosing “commercially sensitive information.”

The decision three weeks ago to grant free-to-air licenses to two groups controlled by pay-TV incumbents and to refuse the bid from HK Television has enraged the Hong Kong public, who sense yet another case of the territory being run by and for Beijing-friendly tycoons.

The HK government made approvals in principle to Fantastic Television (Fantastic TV) backed by cable TV operator I-Cable and to Hong Kong Television Entertainment (HKTVE), backed by PCCW, the telecoms and IPTV group.

Wong and HK Television Network have been preparing for three years for the bid, and even ahead of a license award had spent over HK$300 million ($39 million) on luring talent from other broadcasters and on producing new shows. Since the licensing decision went against the company, some 340 staff have been fired.

Some 20,000 people took to the street last week to protest the decision made by the Secretary for Commerce and Economic Development, Gregory So, but announced without explanation. Mounting pressure has slowly forced more parts of government to attempt to explain and Monday’s statement acknowledged that there were “still public concerns and misunderstandings.”

The statement spoke of gradual and orderly expansion of the market and said that it looked at “whether the number of new licenses will lead to over-competition or vicious competition, including the possible dilution of advertising revenue in a way that all or most of the TV stations will not have adequate revenue during the 12-year license period.” 

It also said that it leaned on advice from the Communications Authority. “Based on the business plans and estimations submitted by the applicants, the consultant’s findings indicated that the market would be able to sustain the operation of three operators (including the two existing licensees), and perhaps four operators under a favorable market condition. The consultant considered that the local free TV market could hardly sustain a total of five players.”

Both of the successful bidders are expected to have one new channel up and running within a year of the licenses being granted formally. Both plan further channel launches in the following year. Fantastic TV is committed to investing over $129 million (HK$1 billion) in the initial six years from launch. HKTVE will invest over $77.4 million (HK$600 million) in the initial three years from launch.

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