HKTV's internet switch wins investor support

Ricky Wong Wai-kay's tactical switch into internet television has drawn strong ratings on the stock market, with shares in his Hong Kong Television Network almost doubling at one point yesterday.

For investors, it was their first opportunity to give their verdict on the broadcaster's plans to offer television services for viewing on internet-enabled and mobile devices after the government denied it a free-to-air licence.

The stock closed up 66 per cent at HK$3.85 yesterday, after rising as much as 92 per cent, compared with a gain of 0.5 per cent in the Hang Seng Index. It lost 34 per cent to HK$2.03 on October 16 after the government's controversial decision to reject the firm's licence application.

Wong, the chairman of HKTV, said on Friday after the market closed that the broadcaster had paid HK$142.2 million for a unit of China Mobile Hong Kong, which holds broadcast spectrum and a unified carrier licence that allow the licensee to offer mobile television services.

Christfund Securities research director Simon Lam Ka-hang said it was a smart move by HKTV, given its investments in television content. Since the firm applied for a licence four years ago, it has spent HK$300 million on producing programmes, at an average of HK$1 million per drama episode.

"But it is very hard to forecast if the television business of HKTV will develop smoothly as Hong Kong's market is a competitive one," said Lam, who believes investors were overly optimistic yesterday. "The deal with China Mobile shows HKTV is now politically safe, but that doesn't mean it is competition-safe."