Market Insight

Hong Kong approves two free-to-air TV licences

October 28, 2013

David Scott David Scott Associate Director – Research and Analysis, Service Providers & Platforms
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Hong Kong's Chief Executive (CE) in Council has issued new domestic free-to-air television programme service licences to Fantastic Television and Hong Kong Television Entertainment (HKTVE). Fantastic Television, a subsidiary of cable pay TV operator I-Cable Communications, and HKTVE backed by telecoms and IPTV group PCCW, were each awarded a new licence in principle on 15 October. The two established players in the pay TV arena are expected to have one new Cantonese-language channel up and running within a year of the licences being formally granted. Both plan further English-language channel launches in the following year according to the proposals submitted to Government. The Government will now discuss with the two broadcasters their proposed licence conditions, and submit recommendations to the CE in Council on whether a free television licence should be formally granted. The CE in Council will then review the recommendations before making a final decision.

Meanwhile, the CE in Council rejected an application from Hong Kong Television (HKTV), formerly known as City Telecom. While only two out of three free television licence applications were approved, the government has suggested more licences may be awarded in the future. Despite this suggestion, HKTV made a voluntary announcement to The Stock Exchange of Hong Kong that it intends to apply for a judicial review in respect of the decision of the CE in Council in refusing to approve the Company's application for a domestic free television programme service licence in Hong Kong.

The new licences are expected to provide Hong Kong viewers with an increase in programme choice and diversity, create more employment opportunities for Hong Kong's creative industries and bring additional investments into local programme production. Fantastic Television has committed to investing over HK$1 billion ($129 million) in the initial six years from the launch of the proposed service. HKTVE will invest over HK$600 million ($77.4 million) in its first three years.

In addition, the new licences will facilitate and promote competition in the free television market by doubling the number of free-to-air TV operators in Hong Kong. Hong Kong currently has two ad-supported free-to-air television networks, the dominant Television Broadcasts (TVB) and perennially struggling Asia Television (ATV). TVB's terrestrial TV channels' overall audience share during weekday primetime was 81 per cent in H1 2013 according to TVB's interim report for the six months to end June 2013.

 

However, unlike the incumbent operators, the new licence holders are engaged in other businesses not directly associated with free TV broadcasting which may divert their attention and resources to their existing pay TV services.

 

This marks the first time in almost 40 years that a new licence has been granted, ending the duopoly maintained by TVB and ATV for 34 years. Hong Kong last granted a new licence in 1975 to Commercial Television Ltd., which ceased operations after three years. The two new integrated channels (Cantonese and English) are planned to be offered in both analogue and digital formats. Digital broadcasts began in Hong Kong on 31 December 2007. Analogue broadcasts are slated to be shut off in 2015, a deadline postponed from 2012.

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