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The Broadcasting Authority (BA) has today (February 8)approved Television Broadcasts Limited (TVB)'s proposed open bidding process for the supply of its television programme or television programme service channel on an exclusive basis, subject to certain modifications.
The domestic free television programme service licence of TVB and the domestic pay television programme service licence of Galaxy Satellite Broadcasting Limited (Galaxy) contain a number of additional conditions as a safeguard to ensure an effective "firewall" between the operation of the two services so as to protect fair competition in the market. One of these conditions provides that the TVB group shall not, directly or indirectly, supply to the Galaxy group any television programme or television programme service channel for inclusion as part of Galaxy's domestic pay television programme service on an exclusive basis without conducting an open bidding process as approved by the BA.
"The objective of this condition is to ensure that there will be no undue preference or unfair cross-subsidization between TVB and Galaxy with regard to programme supply or acquisition and to ensure that competition is protected," said the BA Chairman, Mr Norman Leung.
"We have carefully examined TVB's application against a number of considerations. These include the principles that there should be no unnecessary or unreasonable obstacles in the submission of bids; all relevant information should be provided to potential bidders in advance; and all submissions should be evaluated in accordance with established assessment criteria, etc."
"We have approved TVB's proposed open bidding process subject to a number of modifications. For example, we have put in place a requirement that TVB should, at the same time of the invitation of the bidding, let the prospective bidders have a copy of the draft contract which would form the basis of the negotiation for the final contract. TVB is also required to document the basis upon which the bids are assessed and awarded in a detailed report. The BA may call on such reports when the need arises, " he said.
With the above modifications, the BA is satisfied that the open bidding process to be adopted by TVB for exclusive programme supply is transparent, open and fair.
The BA has noted that there are concerns from some television operators about the way TVB intends to package its programmes/channels for the bidding exercise. Mr Leung explained that the approval, based on the licence condition, concerns solely the bidding process. He added that any conduct of TVB in relation to the open bidding exercise including, but not limited to, the assessment criteria, the way the programs are packaged, the contract terms, etc., is subject to regulation under the competition provisions in the Broadcasting Ordinance (BO). It would therefore be TVB's obligation to ensure that its conduct in relation to the bidding exercise is in compliance with the relevant competition provisions.
"The BA will strictly enforce the competition provisions under the BO, either proactively or in response to complaints," Mr Leung stressed.
Details of the open bidding process approved by the BA are at the following Annex.
Annex
Revised Open Bidding Process for the Supply of Television Programme or Television Programme Service Channel by TVB on an Exclusive Basis
1. TVB will request on a same date all the domestic pay television programme service licensees in Hong Kong to sign a mutual non disclosure agreement within seven days of receipt if they are interested to receive from TVB an invitation letter to bid for TVB's programme/channel.
2. TVB will send on a same date after the expiry of the seven day response period for the mutual non disclosure agreement an invitation letter to all those licensees who signed and returned to TVB the mutual non disclosure agreement, for proposal to bid for the TVB's programme/channel. A draft contract which would form the basis of the negotiations for the formation of the final contract will be attached to the invitation letter for information purpose. The invitation letter will also set out the criteria of assessment.
3. Any interested licensee must submit his proposal in a sealed envelop and place it in a locked tender box before a closing date which will be at least three weeks from the date of the letter of invitation from TVB. Within this period, all interested licensees will be able to clarify any queries they may have with TVB and any clarifications made will be circulated to all those that have signed the non-disclosure agreement at the same time as the clarification sent to the enquiring licensee .
4. TVB will only open the tender box after the time specified and in accordance with the TVB existing tenders opening procedures which have been recommended and approved by ICAC.
5. TVB will evaluate the submissions received and inform all successful and unsuccessful licensees within 14 days after the closing date of the bid. The directors of Galaxy Satellite Broadcasting Limited who are also directors of TVB will not be allowed to access to any proposal received and will not be involved in the assessment process and any confidential information relating to the bidding licensees will be treated as such at all times. The independent directors of TVB will be members of the assessment board to evaluate all proposals received. Further, an independent financial advisor will also be appointed to assist the assessment board to evaluate the proposals and make recommendation to TVB.
6. The assessment board will produce and retain a detailed report on the basis upon which they assess the bids. The assessment board shall ensure that all the considerations during the assessment are fully documented in the detailed report. Such report will be produced to the BA for examination upon the request of the BA.
7. The successful licensee will be required to sign a formal contract with TVB within 21 days after the date of TVB's notification to the successful licensee, failing which, TVB may accept the offer made by the other licensee who made the second best offer to TVB.
End/Thursday, February 8, 2001
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