The following is issued on behalf of the Communications Authority:
     
     The Communications Authority (CA) today (May 7) provided its views to the Commerce and Economic Development Bureau (CEDB) in response to the consultation paper entitled "Review of Television and Sound Broadcasting Regulatory Regimes" issued by the CEDB.

     A spokesman for the CA said, "The CA supports the proposed measures set out in the consultation paper. The broadcasting market has now become more diverse and competitive with the emergence of Internet-based infotainment, and the business environment is increasingly challenging given the imbalance in the regulatory regimes for traditional media and Internet-based TV and sound programme services. The CA considers that the proposed relaxation measures as set out in the consultation paper will help sustain the long-term financial viability of the broadcasting licensees, relieve their compliance burden and encourage new entrants to the broadcasting market while retaining the necessary safeguards to protect the interest of the audiences. The proposals have also addressed some of the major concerns and observations expressed by CA members over the past years regarding the cumbersome and outdated restrictions relating to disqualified persons (DPs) and unqualified voting controllers (UVCs) applications, as well as the non-subsidiary requirements for applicants for new licence. They would also help streamline the administrative work of the CA and enable the CA to focus its time on important and pertinent regulatory issues."

     A gist of the CA's views on the major proposals in the consultation paper is set out below.

Cross-media ownership restrictions
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     The CA considers that the current definition of DP under the Broadcasting Ordinance (Cap. 562) and Part 3A of the Telecommunications Ordinance (Cap. 106) casts too wide a net, which covers corporations and persons whose association with a DP can be rather remote as to render them irrelevant for the purpose of safeguarding against media concentration, conflict of interest and editorial uniformity. 

     The CEDB's proposals to remove certain categories of DP and to narrow the scope of "relative" under the definition of "associate" of DPs are therefore logical and necessary to rationalise the excessively wide catchment of DPs and would help relieve the compliance burden on the licensees. It is envisaged that the proposed changes would not increase the risk of media concentration or editorial uniformity since the three most pervasive broadcasting services, namely domestic free television programme service (free TV), domestic pay television programme service (pay TV) and sound broadcasting service, will remain to be DPs and continue to be disqualified from owning or exercising control of one another. Therefore, the CEDB's proposals as outlined above have the CA's support.

Foreign control restrictions
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     At present, the CA's prior approval is required if the voting control of a free TV licensee by non-Hong Kong residents (i.e. UVCs) reaches 2 per cent, 6 per cent, 10 per cent and above. Based on operational experience over the years, there has been continuous interest of foreign investors in investing in Hong Kong's free TV market for pure investment purposes without any intention to influence or get involved in the day-to-day business of free TV licensees. The starting point of requiring UVCs to seek the CA's prior approval at a shareholding threshold of 2 per cent is considered on the low side. 

     The CEDB's proposal to adjust the shareholding thresholds which will trigger the CA approval process to 5 per cent, 10 per cent, 15 per cent and above should have the benefit of reducing the compliance burden on the licensees and the administrative burden of the CA. Notwithstanding the proposed adjustments to the thresholds levels, the CA notes that the foreign control restrictions on free TV with the residency requirements for a licensee, its directors and principal officers and the attenuation of voting rights at general meetings of the licensees will remain intact, hence providing sufficient safeguards to protect the interests of local audiences. The CEDB's proposal as outlined above has the CA's support.

Requirement of licensee being a non-subsidiary company
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     In a highly competitive broadcasting market today, considerable capital investment and recurrent resources are required to operate a TV or radio station and it is important for the licensee to have adequate and stable financial support. The CEDB's proposal to remove the non-subsidiary requirement currently applicable to free TV licensees and sound broadcasting licensees would simplify the licence application process, relieve the burden on new applicants and allow more flexibility for the licensees to arrange their corporate structure and explore other related businesses thereby bringing in other sources of finance to support the operation of their TV/radio stations. 

     Despite the removal of the non-subsidiary requirement, any changes to the shareholding structure of a licensee will still require prior approval of the CA. The CA will continue to exercise its statutory power under the relevant provisions of the Broadcasting Ordinance and the Broadcasting (Miscellaneous Provisions) Ordinance (Cap. 391) to conduct investigation into matters relating to the control and management of the licensees when required and impose sanctions on any violation of relevant conditions and requirements as appropriate. Therefore, the CEDB's proposal as outlined above has the CA's support.

Licensing authority
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     The existing two-tier mechanism for approving broadcasting licences of different degrees of pervasiveness has been operating well and the CA supports the CEDB's proposal to maintain the status quo.  

     "The Review undertaken by the CEDB is in step with the CA's direction to relax the regulatory controls imposed in the codes of practice it issues to provide a more conducive business environment for broadcasting licensees. A public consultation has just been conducted by the CA on the proposed relaxation measures on indirect advertising and the review exercise is targeted to be completed in mid-2018," the spokesman added.

Ends/Monday, May 7, 2018
Issued at HKT 11:00

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