Agency leaders shake heads at Hong Kong free-to-air TV decision

The drama of the situation rivals that of some dramatic programmes on local television. Wong, who has an unsuccessful past in the TV business, cried in a news conference, and the story has garnered front-page headlines—especially as HKTV announced it would lay off 320 of its 500 staff members yesterday.

Amidst the outcry, what will the real impact be for media agencies and their clients? Campaign Asia-Pacific reached out to several agency heads and got responses to key questions from KK Tsang, CEO of The Bees Group; Ray Wong, CEO of PHD Hong Kong; and Melanie Lo, CEO of GroupM Hong Kong.

What is your initial response to this news?

Tsang: I feel shocked that the government did not issue the broadcasting license to Ricky Wong Wai-kay’s HKTV, as they have met all the requirements, and have made a lot of investment. They have strong commitment and passion and have gained much public support, whilst Now TV and i-Cable TV seemed quite lukewarm when applying for the license. So the result was unexpected.

Wong: The news was surprising, as many people feel that the government would not issue the free-to-air TV licenses. As the whole process has not been transparent, we feel it is unjust for Ricky Wong.

Lo: My first response is surprised and a bit disappointed, as the three channels which are bidding for the free-to-air TV licence, HKTN is comparatively seen as more keen and has done programme previews on YouTube.

What is the current TV advertising market like in Hong Kong?

Tsang: At the moment, TVB has a lion’s share (around 95 per cent) of the free-to-air TV advertising revenue, while only a few local advertisers advertise on ATV, as ATV’s ratings have been especially poor in the past three to four years.

Wong: For TV advertising, TVB, which has a dominant position as a mass TV media channel, would still maintain its strong advantage. Now TV and iCable TV are more news focused. Now TV paid channels have some sports channels, but they are still niche.

As for the mainstream TV viewing, TV dramas are the most popular, and that is what HKTV was striving to offer—new and good quality locally produced drama programmes, which the HK4As fully supported. We support having more choices of free-to-air TV channels, for 4A clients and many international brands. Less than 5 per cent advertise on ATV nowadays.

Lo: The government’s explanation was that they wanted to take a gradual approach in issuing the license, in order not to disrupt too much of the existing TV players. But I personally support having more players in the free-to-air TV channel, as more competition could stimulate more choices and enhance the quality.

How does the news impact the 2014 advertising market?

Tsang: I believe that there will be no immediate impact on the advertising market in Hong Kong in 2014, as Cable TV and Now TV need to launch their new free-to-air channels within 12 months after they get their license. So the quickest time that they would be able to do that will be Q4 next year or even early 2015. Agencies and advertisers need to do their TV commitment for 2014 with TVB by early December this year.

Wong: We have started to do commitment schemes for clients with iCable and TVB for 2014, but Now TV still does not have a commitment scheme. So we can’t do any selling for ad space for them to our clients.

Would the additional two players help to increase TV spending in Hong Kong?

Tsang: Moving forward, whether the two new free-to-air channels can steal TV advertising marketshare from TVB would depend on the quality of their TV programmes and ratings. iCable and Now TV need to have a clear positioning of the programming for their paid and free-to-air channels.

Two extra free-to-air channels could increase the overall size of the TV audience, so there may be an opportunity to enlarge the pie of TV advertising. But there are still lots of unknown factors, as it is a global phenomenon that TV audiences are spending more time online.

Wong: I think this news would create more buzz for TV advertising in Hong Kong. i-Cable’s new channel, Fantastic Channel, should gain a little bit of benefit, but it won’t be a drastic gain in comparison to the 46-year-old major player, TVB, which has well-established structure and manpower.

What advice would you give to Ricky Wong?

Wong: Ricky Wong could adjust his PR strategy a bit, as currently he seems to be taking a hero approach. He is trying to arouse public outcry and support through social media. As a TV channel leader, running a TV channel has its social responsibility. Instead of firing 320 staff straightaway, which is 60 per cent of his 500-person company, he could do some softer goodwill PR to ask other TV stations to take on these high-quality TV industry talents.

HKTV could consider to collaborate with ATV, i-Cable’s Fantastic TV and Now TV to launch the drama programmes that they have already produced, which would be a win-win solution for all parties and not waste the hard work of their own staff.