First there came the news that Hong Kong’s incumbent player plans to delist from Nasdaq, citing a limited trading volume of shares, as well as the time and cost of maintaining the listing in the US. It was a move widely seen as a decision to consolidate its financial resources in the wake of the EPL rights loss.
Next, came the recent announcement that i-Cable had inked joint-ventures with three mainland-based publishing companies.
The deal will see the broadcaster handle advertising sales for Beijing Business Today’s Olympic supplement, Family Periodical Group’s Child Baby and a magazine titled The Movie Show. In March, it acquired the exclusive sales agency for China’s third most-read title, Sanlian Life Weekly.
Chief financial officer William Kwan has publicly stated the broadcaster is beginning to move away from its traditional subscription-based revenue stream, broadening its portfolio of media assets to create a multi-platform offering.
Last year, advertising revenue accounted for only 15 per cent of i-Cable’s pay-TV turnover of HK$1.8 billion (US$230 million).
According to Kwan, the company is eager to build its local programme stable in order to expand that revenue base.
More ambitiously, i-Cable aims to attract more than 10 per cent of Hong Kong’s advertising revenue from the free-to-air operators TVB and ATV.
But just how effective i-Cable’s increased focus on advertising revenue in conjunction with a diversified media portfolio is remains to be seen.
Central to the company’s success will be how it creates and leverages the reach it so clearly requires, through programming and content that consumers both want and need.
Fact Box...
November 2006: i-Cable Communications loses the EPL broadcast rights to rival Now TV
May 2007: i-Cable reveals plans to delist its American Depository Shares from Nasdaq, citing costs and time in maintaining the listing
May 2007: i-Cable announces it will form JVs with three mainland-based magazine publishers in a bid to diversify its media portfolio
Jordan Lau, GM, Maxus
People who have previously subscribed to Cable TV have typically been driven by the English Premier League (EPL), and so the loss of the EPL could deal the broadcaster a fatal blow.
Even though i-Cable can retain subscribers by introducing some more attractive packages, it is unlikely to totally recover the average revenue per user (ARPU). In such a competitive environment, it will not be easy for i-Cable to find exclusive content which can grow its ARPU, or even claw back subscribers. Thus, it really needs to focus on increasing the advertising income ratio in its revenue model, as it has indicated it will.
New channels will expand the audience base and, thus, the potential ratings, and partnerships with other media carriers may also increase the pool of viewers. Diversification into magazines in China is also a sensible decision, in that it will help spread financial risk. Of course the final issue though, will be content.
Besides programme quality, promotion should play a very important role here. A large station has a huge advantage thanks to high exposure of its programme promotions, but a smaller network like i-Cable needs to explore ways to promote its programming outside the box.
Craig Briggs, managing director, Asia, Desgrippes Gobé
First of all, i-Cable is not a brand, it’s a trademark that serves as a pipeline of branded programming. The loss of EPL is a blow, but it’s only a catastrophe if i-Cable can’t keep creating and filling its pipeline with innovative programming of interest to subscribers, both existing and potential.
The new Chinese channel should help. Offering free service is a welcome change. The joint-ventures with mainland publishers may provide additional content innovations, although the words ‘JV’ and ‘China’ always create unnecessary anxiety.
I recall an upstart network in the US a few years ago called Fox. It innovated with a counter-culture show called The Simpsons. It was the first of many innovations that flowed down its pipeline, and now it is a bona fide contender against the former ‘big three’.
Maybe i-Cable can perform similarly, enjoy renewed success, silence the doubters, and start becoming a brand on its own.
Another worry is cost — it’s a big investment to do this. EPL was pricey, but innovative programming isn’t cheap. And, you have an increasingly mobile target that wants to be reached on its own terms. It’s a business for the truly visionary and courageous.
