Buoyed by the Beijing Olympics, full-year ad revenue for 2008 across all media in Hong Kong rose a healthy 12.1 percent or US$812.5 million to US$7.5 billion from US$6.7 billion in 2007, based on figures from market research firm The Nielsen Company. TV continued to be the medium of choice for advertisers although its share of the ad expenditure pie slipped 0.4 percent to 38.6 perecent (US$2.9 billion) in 2008. According to Nielsen, newspapers were the next preferred choice at 34 percent (US$2.6billion) followed by magazines at 17 percent (US$1.3billion), radio at 4.6 percent (US$342.7million), outdoor at 3.9 percent (US$294.7million), and outdoor video advertising at 1.9 percent (US$146million). Registering a 10.8 percent jump, TV ad revenue hit US$2.9 billion in 2008 from US$2.6 billion in 2007. Nielsen figures further indicate that free-to-air (FTA) TV ad revenues grew 7.5 percent from US$2 billion to US$2.2billion – 75.6 percent of the TV ad revenue pie; while pay TV took the remaining 24.4 percent or US$701 million, representing a 20.8 percent increase from US$580.3 million in 2007. While Nielsen was unable to release the breakdown of ad revenue distribution by TV channels, media consulting firm Media Partners Asia suggests dominant FTA broadcaster Television Broadcasts Limited (TVB) held as much as 75 percent of TV advertising while just 15 percent went to rival Asia Television (ATV). Although ad rates hiked 8 percent prior to its broadcast of the August 2008 Beijing Olympics, TVB froze its 2009 rate card in anticipation of the challenging economic conditions ahead. Likewise, ATV registered no rate raises and promised “50 percent additional bonus” to draw advertisers. As with 2007, 2008 saw TVB programs monopolize all ten slots in CSM Media Research’s annual list of top ten rated TV programmes. While the Beijing Olympics was anticipated to be keenly watched by Hong Kong audiences, especially with equestrian events being held in the Special Administrative Region’s (SAR) Sha Tin, the sporting extravaganza’s opening ceremony on TVB was the only Olympic-related program – rated eighth – to make it into the list. The remaining nine slots were occupied by Cantonese drama series, topped by family feud drama Moonlight Resonance, an indirect sequel (similar cast, different storyline) to 2007’s top-rated Heart of Greed. Moonlight Resonance also became TVB’s highest rated series ever. Free-To-Air Having co-operated to launch digital terrestrial TV (DTT) service with signal coverage of 50 percent of Hong Kong at the turn of 2008, TVB and ATV extended it to the 75 percent target for the Olympics broadcast. Both broadcasters are expected to continue expanding coverage to 100 percent for analogue switch-off by 2012. Take-up rate exceeded government expectation as 9.7 percent of households made the switch to digital TV by May 2008. “The DTT take-up rate in most of the advanced economies does not exceed 5 percent in the first year of launch, while that of Hong Kong has reached nearly 10 percent just six months after the launch,” observed Alan Siu, deputy secretary for Commerce and Economic Development (Communications and Technology). Since then, the number continued to grow, surging to 15.6 percent of households by July 2008, and to 20 percent of households, 500,000 families, by September 2008. The latest figures from the December 2008 survey found digital homes to have risen 38 percent from September figures to total 32.3 percent (727,000 households). The highlight of TVB’s year was its Olympics broadcast which recorded an investment of US$10.3 million in resources, facilities and manpower, as well as a 7,000 sq. ft studio set up at the International Broadcast Centre in Beijing. TVB’s HD channel HD Jade was converted into a 24-hour HD Olympics channel and provided a record length of continuous HD coverage over 16 days, with live footage accompanied by full 5.1 Dolby Surround Sound. In addition, a 27-strong technical team from TVB was also selected to support coverage for equestrian events in Sha Tin for worldwide broadcast. “TVB has committed such unprecedented investment in this Olympic Games because it (was) being held for the first time ever on our home grounds on the mainland and in Hong Kong. It is also the first time ever Hong Kong has the honour and privilege of being an Olympic co-host city,” shared Cheong Shin Keong, GM – broadcasting, and Olympics project chairman, TVB. Riding on DTT, TVB added two new digital channels to HD Jade and its flagship Cantonese and English channels Jade and Pearl to total five channels. 30 June 2008 marked the debut of new J2 youth channel which offers in-house-produced and acquired entertainment, lifestyle, travel, music and anime shows along with Asian drama series, in Cantonese, Mandarin, Japanese and Korean languages. i-News which offers 24-hour news, public affairs, sports and financial programming along with interactive information services commenced trial broadcast from November 2008 and launched officially on 1 January 2009. Amidst worsening economic conditions in December 2008, TVB laid off 212 employees or 6 percent of its 3,400-strong local workforce in a “painful” decision to maintain competitiveness. Worst hit were staff from production resources including wardrobe, set construction, hair and makeup, as well as administration, although no artistes were affected. Stephen Chan, GM – broadcasting revealed that while TVB was recording profits, “quick and necessary steps” were necessary to prevent the situation from worsening. The layoffs also triggered protests at TVB’s Television City studio complex by various unions. Local media also reported a further 50 staff were fired in February 2009. The austerity drive over at ATV saw the 1,000-strong staff suffer two waves of retrenchments. The first in November 2008 saw 63 staff from the news and production departments sacked, as VP Kwong Hoi-ying defended the decision as a necessary step to cope with declining ad revenue. The second wave hit on 12 February 2009 as it made 207 employees redundant, stating “due to the tremendous strain the company faces in its daily operations, ATV can only ride out the difficult times by downsizing”. The job cuts at beleaguered ATV proved to be the tip of the iceberg as problems started mounting in October 2008 when director and chief executive Louis Page departed to pursue “personal interests”. Appointing ex-PCCW deputy chairman Linus Cheung as executive chairman, and City Telecom’s chairman and executive director Ricky Wong as CEO in December, ATV then suffered further losses as senior executives Dewy Ip, EVP, and Peter Kwan, SVP, news & public affairs resigned, while Howard Ho, SVP, engineering, retired. In the same month, the broadcaster plunged into turmoil as a vote-fixing scandal tarnished the ATV-organized Miss Asia beauty pageant. Discrepancies in SMS and online votes were confirmed by ATV executive chairman Cheung who appointed an independent committee to investigate the matter. He then dropped a second bomb by announcing ATV CEO Wong had quit due to “irreconcilable difference in management style”, only for the latter to publicly deny the allegation. The drastic turn of events prompted even the government to voice its “dissatisfaction” over “unwarranted speculation” and loss of public confidence in “ATV’s ability to continue to provide free-to-air TV services”. Warned by the authorities to “move quickly to clarify the situation and sort out the management changes”, ATV submitted a notice of the changes following a board meeting on 17 December, with Wong confirming his departure but retaining a consultative role to the broadcaster. The start of 2009 however, heralded a positive turn for ATV as US$129 million worth of convertible bonds was invested by Taiwanese billionaire Tsai Eng-meng who became the key shareholder of Alnery, the company holding a 47.58 percent stake in ATV. Tsai is the chairman of China-based snack manufacturer Want Want China Holdings and is injecting the funds in his personal capacity. The deal was reportedly brokered by Rebecca Huang, a close friend of Linus Cheung’s and a senior executive at Taiwan’s Eastern Broadcasting Company. It remains to be seen how Tsai’s entry will change ATV’s flagging fortunes. After all, the broadcaster’s position has changed little even after a US$103 million boost in 2007 when the Cha family, ABN Amro Bank, and Page, ATV’s ex-director and chief executive took a 58 percent stake in ATV. Having rebranded, restructured, and launched six digital channels in the last two years, ATV’s share of the market has not grown, and is believed to be losing some US$129,000 a day. The vast gulf between the worth of the rivals – ATV valued at US$451 million against TVB at US$5.2billion – reflects not only the massive challenge that ATV faces, but also the potential for growth. Pay-TV Pay TV in Hong Kong continued to be dominated by PCCW’s IPTV service now TV and i-CABLE Communications’ cable TV service i-CABLE, with 2008 marking a milestone for the former as its installed base exceeded incumbent i-CABLE’s subscription base for the first time. Based on available data at the time of writing, the first six months of 2008 saw now TV’s installed base climb 5.1 percent to 927,000 while the paying base, still behind i-CABLE’s subscription base, hit 668,000 on the back of a 9.6 percent growth. For i-CABLE, subscriber base edged 1.1 percent up over the same period to 892,000. Besides winning broadcast rights to the popular English Premier League (EPL) football from i-CABLE for three seasons, now TV added brought its channel offerings past the 160 mark in 2009. April 2008 launches included China-based financial news channel China Business Network, sci-fi and mystery entertainment channel AXN Beyond, Chinese hit movies channel Celestial Movies Asia, and classic Chinese movie channel Celestial Classic Movies. Female entertainment channel Sony Entertainment Television debuted in July, while AETN All Asia Networks’ documentary and infotainment channels The Biography Channel and The History Channel came on in July and September respectively. now TV’s in-house produced Cantonese infotainment channel now Hong Kong Channel rolled out in December before All Sports Network took to the IPTV service as well as rival i-CABLE in January 2009. Financially, now TV reported 45 percent year-on-year growth in revenue to US$134 million in June 2008 attributed to higher subscription yields resulting from increased ARPU and expanded paying base from the addition of new content. However, the IPTV service has seen fortunes of parent company PCCW worsen. In February 2009, securities watchdog halted chairman Richard Li Tzar Kai’s bid to privatize the company following a share price slump under suspicion of vote-rigging. Problems were compounded in the same month as Hong Kong union chiefs revealed the company’s plans to make a 10 percent pay cut to 1,500 frontline technicians working for 16 PCCW contractors, and layoffs totaling 700 network maintenance staff. The news was greeted by a half-day strike staged by more than 500 staff. At i-CABLE, parent company i-CABLE Communications suffered a 78 percent plunge in net profit in the first half of 2008, fueled in part by a 16 percent decline in pay-TV revenues to US$90.2 million from downsized subscriptions following the loss of EPL football. Issuing a profit warning in the third quarter of 2008, i-CABLE Communications conceded that the “operating environment in the near term is not expected to improve”, but noted that its “strong balance sheet and its significantly lower cost base for both fixed assets and operating expenditures” will help in the “war of attrition” in its pay-TV business. As with now TV, i-CABLE also managed expand content offerings with wildlife network Nat Geo Wild and international news channel Al Jazeera English launched in January 2008; as well as infant edutainment channel BabyFirst and Christian channel Daystar Television Network rolled out in March 2008. Significant investments also went into acquiring broadcast rights to three seasons of European football competitions UEFA Champions League and UEFA Cup starting in 2009, on top of rights to the 2010 FIFA World Cup football tournament, the 2010 Winter Olympics and London 2012 Olympics. Garmen Chan, VP, external affairs, Hong Kong Cable Television Limited (subsidiary of i-CABLE Communications and operator of i-CABLE) revealed, “There has not been any staff layoffs at i-CABLE and we are not planning any. We have always maintained prudent financial management policies and the Group still maintained a strong and healthy cash flow despite the general economic downturn.” Looking ahead, Chan concluded, “The Hong Kong consumer market is being affected by the global condition which is generally depressed, and this is the key challenge that i-CABLE faces along with all other business operations in Hong Kong.” Mobile TV A spark in the doom and gloom of 2009 looks set to come in the form of mobile TV as the Commerce and Economic Development Bureau (CEDB) announced its plan to offer 15-year licenses to one UHF Band multiplex and two Band III multiplex packages for auction by mid-2009. With laws governing ownership or cross-holding restrictions to be relaxed, the bureau stated that mobile broadcasting standards will be left to operators’ choosing. In addition, a ”light-handed approach” to regulating mobile TV content based on existing general law and industry self-regulatory codes of practice was promised. “Mobile TV exemplifies technological advancement and media convergence. The market worldwide has called for timely response from governments and regulators to facilitate the launch and growth of this innovative service,” said Duncan Pescod, permanent secretary for CEDB. UHF and Band III multiplexes can carry 20 and six mobile TV channels respectively and operators will be required to use at least half the transmission capacity for mobile TV content, and the remainder for non-mobile TV services including digital audio broadcasting or datacasting. Adopting a ‘pro-mobile TV’ stance, operators are required to commence services with coverage of at least half of Hong Kong’s population within a year and a half from the successful license bid. TVAplus