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The following is issued on behalf of the Broadcasting Authority:
At its meeting today (September 17), the Broadcasting Authority (BA) considered two competition complaints against Television Broadcasts Limited (TVB) and Galaxy Satellite Broadcasting Limited (Galaxy) for engaging in anti-competitive conduct in the pay TV market and breaching sections 13 and 14 of the Broadcasting Ordinance (BO) (Cap 562). The complaints concerned the supply of exclusive broadcasting rights to the drama series "Jewel in the Palace" and four television channels by TVB to Galaxy for broadcast on Galaxy's pay TV service, SuperSUN. After conducting a preliminary enquiry in accordance with its investigation procedures, the BA concluded that TVB and Galaxy had not breached sections 13 or 14 of the BO. Details of the above two complaints considered by the BA in September are set out in the Background Note at the Annex.
The BA noted at the meeting today the major findings of the Broadcasting Services Survey by an independent professional firm commissioned by the BA. The survey was conducted in April/May this year. The main objectives of the survey are to assess the television viewing habits and radio listening habits of the Hong Kong population and to gauge their views on the regulation of different types of broadcasting services in Hong Kong. A total of 1,500 successful face-to-face interviews were conducted with respondents aged 15 or above. Major findings of the survey are set out in the Background Note at the Annex. The Executive Summary of the survey findings is available at the BA website at http://www.hkba.hk.
The BA also approved the application by Auspicious Colour Limited for a non-domestic television programme service licence. The term of the licence is 12 years and the validity period is from September 17, 2005 to September 16, 2017 (both dates inclusive). There are now altogether 14 non-domestic television programme service licensees in Hong Kong providing 135 satellite television channels targeting viewers in Asia Pacific region, of which about 50 channels are available for reception in Hong Kong.
Annex:
Background Note on Preliminary enquiry into the competition complaints against TVB and Galaxy for engaging in anti-competitive conduct in the pay TV market
The Broadcasting Ordinance (Cap.562) (BO) contains provisions governing anti-competitive conduct and abuse of dominance to safeguard fair competition in the television programme service market. Section 13 prohibits a licensee from engaging in conduct which has the purpose or effect of preventing, distorting or substantially restricting competition in a television programme service market, while section 14 prohibits a licensee in a dominant position in a television programme service market from abusing its position. Through the effective enforcement of the competition provisions, the community can have a wider choice of quality progrmames while all operators in the market can freely compete on a level-playing field.
Complaint cases
In June 2005, the BA received two complaints lodged by PCCW Media Limited (PCCW) and Hong Kong Cable Television Limited (HKCTV) alleging that-
(a) the supply of exclusive broadcasting rights to the Korean drama series "Jewel in the Palace" (the Programme) and four television channels viz., TVB Health, TVB Choice, TVBM and Drama Select (the Four Channels), by TVB to Galaxy was in breach of the prohibition on anti-competitive conduct under section 13 of the BO; and
(b) in view of TVB's dominance in the free TV market and the Cantonese language content market, the conduct of TVB constituted an abuse of its dominant position and a breach of the prohibition on abuse of dominance under section 14 of the BO.
Having carefully considered the submissions from contending parties and the analyses prepared by the competition consultant, the BA concluded that the conduct of TVB and Galaxy did not have the purpose or effect of preventing, distorting or substantially restricting competition in the television programme service market nor amounted to an abuse of dominant position. The main reasons for the BA's decision are-
(a) Exclusivity was a commonly accepted commercial practice in the broadcasting sector. Concerning the Four Channels, the scope of the exclusive content was somewhat limited (i.e. no more than four Cantonese language channels relative to over 40 Cantonese language channels and a total of nearly 200 channels made available to viewers in Hong Kong on a subscription basis). There was also a wide range of alternative content available for other operators to acquire and include in their services. The BA noted that HKCTV had exclusive rights to premium sports content and PCCW had recently entered into programming agreements with channel providers to exclusively broadcast premium movie programming.
(b) As to the Programme, the scope of the broadcasting rights for the Programme was also limited. It affected only approximately 54 hours of television programming. Further, the importance of Galaxy's exclusivity was reduced as the Programme had already been broadcast on free TV.
(c) While TVB might be presumed dominant in the free TV market, there was no prima facie evidence to find that TVB's conduct had the purpose or effect of preventing, distorting or substantially restricting competition on the pay TV market. TVB's ownership of Galaxy did not seem to have enhanced Galaxy's capability in acquiring dominance in the pay TV market. Galaxy had a relatively modest position as a competitor for subscribers against the other established operators. There was no evidence that competition in the pay TV market was being adversely affected by the supply of the Programme and Four Channels.
(d) With regard to the supply of Cantonese language content, no case has been made out that TVB's conduct would result in foreclosure of the supply of Cantonese language content in the pay TV market. The BA noted that a range of alternative Cantonese language contents was being offered by other operators in the pay TV market.
The investigation report on these unsubstantiated competition complaints, with the confidential material removed, is available on BA's website: http://www.hkba.hk/en/tv/competition/complaint_cases.html.
Background Note on Broadcasting Services Survey 2005
The main objectives of the survey are to assess the television viewing habits and radio listening habits of the Hong Kong population and to gauge their views on the regulation of different types of broadcasting services in Hong Kong. A total of 1,500 persons aged 15 or above were interviewed during the household visits conducted in April and May this year.
According to the survey, domestic free television programmes services (free TV) achieved a penetration rate of 99.6% of all Hong Kong households, while domestic pay television services (pay TV) achieved a penetration rate of 33.8%. The penetration rate of sound broadcasting services (radio) was 95.2%.
The respondents spent an average of 3 hours and 1.6 hours per day watching free TV and pay TV programmes respectively. They spent 2 hours daily on average listening to radio.
More than 62% of the respondents said that they were satisfied with the variety of free television programmes, while 51.6% considered the quantity of local productions on free television sufficient.
The majority of the respondents - 69.1% of free TV viewers, 88.6% of radio listeners and 85.9% of pay TV viewers - claimed that they had not come across any offensive material in their TV viewing or radio listening in the year prior to the survey.
The survey also found that 65.7% of the respondents were aware of the complaint avenues provided by the BA and 53.4% are aware of the avenues provided by the TV and radio stations. 40.6% considered lodging complaints directly to TV and radio stations would help the broadcasters to take follow-up actions effectively while 28.4% held the opposite view.
On the broadcast of video and sound materials via multimedia channels, 11.4% of the respondents said that they had watched video materials through the Internet and 3.6% through mobile phones. 13.9% of the respondents had listened to radio programmes on the Internet.
The survey also revealed that 46.1% of the respondents supported the regulation of video materials via the Internet or mobile phones, while 33.8% had no opinion and 20.1% considered regulation unnecessary. As to on-line radio broadcast, 37.3% of the respondents believed that it should also be regulated while 38.6% had no opinion and 24.1% considered regulation unnecessary.
Ends/Saturday, September 17, 2005
Issued at HKT 14:40
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