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Vet Cable TV set to shake off new competish

Others in the market struggle to catch up

HONG KONG — When the government deregulated the city’s pay TV market in December, many people believed one-time monopoly player Cable TV would soon be toast.

But it is emerging as a good bet.

Insiders say there is only room for two or three pay TV players in the market. By the end of this year, six, including four new licensees, will jostle for position with Cable TV.

Launch dates are looming, but some new services aren’t even talking about their plans yet.

In the middle of all this confusion, Cable TV, with 500,000 subscribers and 31 channels, is starting to look like a winner for investors and viewers.

“It’s not an easy business to get into,” says Samuel Wong, Cable TV’s veep for finance and corporate development. The hard work, he’s implying, is all behind 7-year-old Cable TV.

Timing is crucial. News Corp.-owned Star’s dramatic withdrawal from the license process in December suddenly made Cable TV’s job look easier. And it has already had a big head start.

Cable TV’s parent company, iCable Communications, a division of Hong Kong conglomerate Wharf Holdings, raised $556 million in an IPO last year before the markets turned sour.

This cash pile may explain the bullishness at the company, which has yet to turn a profit, although its Cable TV division moved slightly into the black for the first time last year.

Convergence is the name of iCable’s game: The company is also eyeing future revenue from broadband and dial-up Internet access via its cable network.

Despite the optimism in the company, the going will still be tough. The Hong Kong market has remained resistant to pay TV in comparison with some of its Asian neighbors.

Cable reaches about 1.7 million, or 25%, of homes, while about 449,000 homes have satellite. Quaint old terrestrial TV still commands 92% of the audience, according to ratings agency ACNielsen, with cable taking 7% and satellite an estimated 1%.

In stark contrast, cable channels in Taiwan, a mature market where cable penetration is about 80%, command almost 60% audience share.

Cable TV’s biggest advantage might turn out to be the 10,000 hours of programming it creates each year. Its competitors are understandably wary of producing their own Cantonese-language content for Hong Kong because it doesn’t travel well to other markets, even Mandarin-speaking mainland China.

But it is widely believed to be essential for success. The next year will be a nail-biting — and expensive — period for the market’s new entrants. Cable TV will have to make sure it doesn’t squander its big lead.

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