TVB abandons stock buy-back, dealing a blow to mainland mogul’s plan to extend control

Hong Kong’s main free-to-air broadcaster has withdrawn its controversial share buy-back offer, abandoning a move that would have helped mainland Chinese mogul Li Ruigang raise his stake in Television Broadcasts Limited (TVB).

The network withdrew its offer to buy back up to 120 million of its shares, as a 12-month deadline had lapsed for the city’s Communications Authority to approve an earlier, related restructuring, TVB said in a filing to the Hong Kong stock exchange. TVB, founded in November 1967, said it may consider revisiting the buy-back plan “at an appropriate time.”

The buy-back proposal, part of a restructuring plan to revitalise the city’s oldest television network for the internet age, was controversial because it challenged Hong Kong’s broadcast ordinance, which stipulated that only local residents can be the beneficiary controller of a license.

Li, founder and chairman of the China Media Capital (CMC) group, hails from Shanghai, and served as an official in the city’s government before entering business. CMC exerts its control over TVB through an entity called Young Lion Holdings, which owns 26 per cent of the Hong Kong broadcaster.

Under the buy-back proposal, Young Lion would expand its stake in TVB to 41.19 per cent. Normally this would necessitate a formal takeover bid, but Li requested for a waiver from the Securities and Futures Commission.

The buy-back was opposed by TVB’s second-largest shareholder, UK-based hedge fund Silchester International.