The plan has been on the table for a year. But Hong Kong’s media regulator, the Communications Authority, has failed to give its ruling on the takeover bid.
Under the plan, announced as preparing the company for the digital age through reorganization, TVB was to have bought up some 31% of its own shares for HK$4.12 billion. It was structured so that Young Lion, of which Li’s China Media Capital controls 79%, would increase its ownership of TVB from 26% to 41%.
In normal circumstances, that should have triggered a full takeover bid for TVB. But Li and CMC obtained an exemption from Hong Kong’s stock market regulators.
Two other problems remained. The buyback was opposed by TVB’s second largest shareholder, financial group Silchester International. Second, as a mainland Chinese who is not resident in Hong Kong, Li would not normally be allowed to control a Hong Kong media company. The Communications Authority was required to deliberate, but did not manage to come to a decision in time for the bid to go through.
TVB said that it would continue to assist the Communications Authority with its enquiries. Li is already TVB’s vice chairman and non-executive director. His suitability for the role was previously in doubt as Li’s boardroom position at global advertising agency WPP also contravenes Hong Kong media regulations.
TVB also said that it would revisit the idea of a repurchase offer and look at other ways of achieving its commercial goals. At noon on Wednesday, after they resumed trading, shares of TVB rose by 1.8% to HK$27.7 apiece.