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The Government announced today (February 19) that the Chief Executive in Council had approved TVB Pay Vision Limited's application for amending its domestic pay television programme service licence condition and milestone. It was required to incur a minimum capital and operating expenditure of $2.98 billion by February 22, 2013, with a bonded sum of $50 million.
"From the public interest perspective, a continuing investment by TVB Pay Vision in the local broadcasting market will bring about public interest gain by providing competition and choice in the market as well as continuous investment in the broadcasting industry," a spokesman for the Commerce and Economic Development Bureau said today.
TVB Pay Vision Limited had committed itself to a service roll-out plan with 15 milestones when applying for the domestic pay television programme service licence in 2000. It had completed 14 milestones, and the remaining one was to invest $5 billion within 78 months from the commencement of the licence - by August 23, 2007 - with a corresponding performance bond of $50 million.
The licensee earlier applied for a complete release from the milestone and the corresponding bonded sum, and further submitted last October an alternative proposal of incurring $1.38 billion during the remaining validity period of the licence (by February, 2013) as capital and operating expenditure. Including the investment of $1.6 billion already incurred from 2000 to 2007, TVB Pay Vision's proposed cumulative amount of investment was $2.98 billion in place of the original amount of $5 billion.
"We do not consider there are sufficient grounds to justify a complete release of the licensee's original milestone which formed part of the licence condition.
"However, having regard to the supportive arguments submitted by TVB Pay Vision, including reduction in hardware costs as a result of technological advancement, market changes over the years and the over-estimation of subscription size, we consider that its proposal at $2.98 billion could be justified," the spokesman said.
The spokesman noted that the dotcom crash had brought severe challenges to players in the broadcasting and telecommunications market. This particular milestone earlier proposed by TVB Pay Vision was also significantly higher and spanned a much longer time period as compared to its competitors which were licensed in 2000 and subsequently withdrew from the market.
"Under the proposal, TVB Pay Vision will continue to invest to enhance the quality and variety of its television programme service," the spokesman said.
"The Government decided to keep the bonded sum of $50 million intact. It would underline our determination to safeguard the integrity of the licensing regime and would also serve as a reminder to all television licensees," the spokesman said. "We have consulted the Broadcasting Authority on the application of TVB Pay Vision."
Under sections 10(4) of the Broadcasting Ordinance and Conditions 4.1 of the domestic pay television programme service licence, the Chief Executive in Council may vary the licence on public interest ground after considering representations made by the licensee.
Ends/Tuesday, February 19, 2008
Issued at HKT 16:45
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