Satellites soar as papers go to war
Hong Kong faces greater
demand from foreign broadcasters for ownership of satellite
uplinking licences, and further consolidation of its newspaper
publishing industry, after the handover, say media insiders.
Satellite broadcasters, including some of the industry's biggest
names - STAR TV, Turner Broadcasting and CNBC - are operating in an
environment where legislation permits only 49 per cent foreign
ownership of satellite uplinking licences. The recent trend has been
for governments to take back control of their airwaves.
Most of the broadcasters interviewed were optimistic about the
opportunities ahead for their companies with Hong Kong part of
China, but stress 100 per cent ownership, or a controlling share, of
licences is vital for profitability.
A Hong Kong Government official has hinted changes are afoot but
no legislation has been passed.
In publishing, the SAR's 10 major daily Chinese-language
newspapers will face further consolidation, with too many papers
chasing too few advertisers.
A four-month price war begun in late 1995 led to the closure of
four newspapers, and entertainment magazines face a similar
situation after the handover, says a media analyst.
Regardless of these uncertainties, Hong Kong remains an important
centre for satellite broadcasters, satellite launch companies,
radio, public relations companies, advertising firms and publishers.
In post-handover Hong Kong the broadcasting sector faces perhaps
the biggest changes and greatest opportunities for rewards.
Secretary for Broadcasting, Culture and Sport Brian Chau Tak-hay has
indicated the 49 per cent cap could be removed to allow foreign
programme providers to own the majority of their uplinking
This would be welcome news for an industry where most operations
have been losing money and are still finding it difficult to attract
Zenith Media estimates that last year the cable and satellite
industry, with 300 million homes wired up in Asia, received barely 1
per cent - US$300 million out of $26.5 billion, or HK$2,320 billion
out of a total $17,943 billion - of its advertising income from the
continent (excluding Japan). By comparison, America - with fewer
cable homes than Asia - generated about 5 per cent.
It must be noted that Asia is still considered an investment
region and initial losses were always expected.
The industry could benefit further now that the SAR Government
has the authority to draw up its own broadcasting policy - without
interference from Beijing. No changes to existing law are expected
until at least next year.
If legislation is not passed to offer broadcasters a comfortable
environment in which to operate, Singapore and other production
centres will continue to lure foreign operators at the expense of
Gary Davey, chief executive of STAR TV - the territory's largest
satellite broadcaster, with an estimated 260 million viewers in 53
countries - said his company always felt there would be no detriment
to the regulatory environment after the handover, only long-term
The broadcaster, owned by Rupert Murdoch's News Corporation,
recently won Hong Kong Government reconfirmation of its uplink and
downlink licences for another six years.
STAR owns 49 per cent of its licence through News Corp's share of
HutchVision. The rest of the licence is owned by a family company
controlled by Li Ka-shing.
"We've been advised that later this year there will be due
consideration given to foreign ownership of those licences, and the
costs of those licences through various regulatory fees have been
substantially reduced in the past three months - and that's
encouraging," Mr Davey said.
"It's important for the future of Hong Kong as well as China that
Hong Kong be confirmed as a sound and stable base to operate media
Fung Shing-kwong, president of NBC Asia, which broadcasts on two
channels in the region, said the network set up shop in Hong Kong in
June 1995 because of its importance as a business centre and the
availability of technical staff.
He said the handover would have little effect on the network,
other than to strengthen its relationship with China.
One industry analyst believes that Hong Kong may have already
lost its pre-eminence as the Asian media hub for satellite
broadcasters because proper legislation was not created early enough
to allow operators to feel secure.
Susan Schoenfeld, president of Advisers for International Media
Asia, said Singapore understood the assurances broadcasters were
looking for and provided them. She cited ESPN, STAR Sports, MTV
Asia, Discovery Channel and Asia Business News, all Singapore-based
Robert Chua, chairman and founder of the Putonghua-transmission
China Entertainment Television Broadcast - seen in 32 million
Chinese homes - disagreed, saying it would be easier for foreign
firms to operate in China from now on.
"I don't think there will be any major changes. I see opportunity
because more people are going to want to learn Mandarin [in Hong
Kong]. It won't be a big influx but Mandarin is nationwide and there
is a demand," he said.
In publishing, the consensus is for more consolidation among Hong
Kong's Chinese-language newspapers but not many opportunities to
On May 12 this year, the Oriental Daily News - Hong Kong's
biggest-selling paper with a circulation of about 400,000 - cut its
cover price from $5 to $2, sparking the latest price war in the
battle for circulation.
Yeung Wai-hong, chairman of Next Media (Holdings) - which
publishes the 350,000-circulation Apple Daily - said the company
would withstand the current war and continue to grow and operate
under its two founding principles, liberty and market freedom.
Mr Yeung said Apple Daily, founded by clothing tycoon Jimmy Lai
Chee-ying, would expand its classified section in future, since it
aimed to be the market leader. Classifieds account for about 10 per
cent of its revenue.
"We don't see opportunities in China. We are a Hong Kong paper
and we will continue to be," Mr Yeung said.
Kaushik Shridharani, a media industry research analyst for
Salomon Brothers, said the industry would remain vibrant. He said
consolidation was imminent because of intense competition, largely
since the introduction of Apple Daily.
"You will probably see a reduction in daily newspapers and some
magazines too. The industry will not benefit as much as it did
perhaps from 1992 to 1994 [when there was effectively no competition
and] when the economic surge led to an increased demand for
advertising," he said.
Mr Shridharani said the Chinese-language entertainment magazines
would face a similar situation of consolidation to that of
newspapers. The market would fragment, with less demand for
generalist magazines like entertainment weeklies.
English-language dailies, Mr Shridharani said, would probably
figure less after the handover but papers like the South China
Morning Post would continue to have strong circulations.
"It [the English-language press] will matter less in terms of
shaping opinion or even being the organ for public thought. But it
will probably get stronger, as the bulk of its audience will use it
to develop their English-language skills."
Steve Marcopoto, president of Time Inc Asia, said his company had
no immediate plans for the China market but was looking at launching
some of its "softer" titles - Sports Illustrated, Parenting and
Health - at some time in the future.
"We realise the China market is a sensitive one for a general
news magazine like Time so we don't have any immediate plans for
moving into the country with the magazine," he said.
"Our role is as a strong place for a pan-regional headquarters of
a multinational company."