Analysis | Size does matter: Hong Kong’s TV industry pays the price for small market

Television broadcasting, like most media and entertainment businesses, is no easy industry to play in – even more so in Hong Kong.

That is the latest assessment from Richard Li Tzar-kai, chairman of telecommunications giant PCCW, which owns both pay-TV and free-to-air TV businesses in the city.

“Cash flows from our pay-TV business, Now TV, will help develop our free-TV business, Viu TV,” he told PCCW’s annual general shareholders’ meeting on Friday. “We do not expect Viu TV to be profitable in the next two to three years, but it will be a good [content distribution] platform for us.”

PCCW plans to plough HK$350 million into Viu TV, whose operating costs have been lowered by savings from economies of scale and resource-sharing from its pay-TV business.

Viu TV, launched in April last year, booked revenue of HK$160 million for 2016, a fraction of the HK$2.9 billion PCCW earned from 19-year-old Now TV, according to PCCW’s latest annual results filing. Viu TV had operating losses of HK$183 million before accounting for asset depreciation.

Although Now TV is the pay-TV market leader in Hong Kong, it suffered a decline in profitability last year, with earnings before interest, tax, depreciation and amortisation falling 15.9 per cent to HK$413 million.

Now TV’s best year was 2011 when it reported ebitda of HK$631 million. No net profit figure was disclosed.