Live Issue... HK stations combat sliding viewership

Asia Television’s (ATV) recent management mêlée offered more cliff-hanging drama than a TV soap. Twelve days after being appointed, chairman Ricky Wong Wai Kay abruptly resigned, only to claim he hadn’t left the company.

Following a round of layoffs at rival Hong Kong broadcaster Television Broadcasts (TVB) and further rumours about the intentions of owner Sir Run Run Shaw, it made for a turbulent end to 2008 for the territory’s terrestrial TV players. Now the dust has settled, where should the two operators head next as they seek to attract viewers and advertisers?

Early in the new year, ATV’s new executive chairman Linus Cheung Wing-lam rolled out his plans for the beleaguered station which - pending a HK$1 billion (US$129 million) injection - will launch in April.

Cheung’s grand plan to turn around the station’s daily HK$1 million losses includes streamlining ATV’s five standard-definition channels and one high-definition channel into themed channels. “For example, can we have an Asian food channel or Asian travel?” he suggests.

He also wants to contract out drama productions. Even though they may not be as popular with a younger audience, “there is still a need for drama as my mother who is 82 watches them”. The news will also be overhauled, incorporating more international stories - currently these make up just 20 per cent of total daily news coverage.

One criticism of ATV in the past has been its focus on competing with TVB, which has far greater resources, rather than developing its own niche. The latest changes may not go far enough, according to GroupM’s Hong Kong CEO, KK Tsang. “ATV’s positioning is still not so clear,” he says. “As a small operator, it should be more focused on niche programming to target audiences, and not be too general.”

However, one thing that may be changing is ATV’s obsession with rivalling TVB. “[ATV] should not see TVB as the direct competitor,” Cheung announced in early January. Instead, he has his sights set beyond Hong Kong, claiming that ATV can reach up to 220 million viewers in Guangdong province alone, and another 400 million Chinese who live around the world. TVB’s senior manager of corporate and community relations, Winnie Ho, says it has similar ambitions. “We are not restricted to just local audiences but regional and worldwide,” she says.

Indeed, TVB’s underdeveloped mainland business was cited as a major draw for buyers in Shaw’s abortive attempts to sell the station last year.

Both stations have good reason to be looking for new opportunities. Both remain solid options for advertisers, but, says Melanie Lo, leader of media agency Mindshare Hong Kong, they are coming under threat from pay-TV operators and media such as outdoor and online. “Local TV in Hong Kong is still unbeatable in terms of reach. So quality programmes are still attractive,” she says. “TVB and ATV are facing more intense competition. It is not big enough to threaten their leading position yet, but their audiences are slowly sliding. So it is important for them to start fighting back now.”

The main advertising draws on both stations will remain quality Cantonese programming, as those channels have the largest audience share. Chris Skinner, managing partner of Initiative in Hong Kong, agrees that the two channels retain advertiser appeal. “Advertisers go where the audience is, so the core channels [TVB and ATV] are still safe options for conservative placements.”

But when targeting the young and trendy demographic, Skinner says he opts for ads on pay-TV operator now TV and YouTube.  This slightly traditional reputation is something ATV wants to address. General manager Kwong Hoi-ying says that the station has plans to target a younger, trendier market “The future plan will be more innovative, targeting all audience levels, and multimedia will be one of our targets.”

As for TVB, Tsang says the decline in terrestrial television viewership means it has “reasons to be conservative”, thus the downsizing of 200 staff late last year was “heading in the right direction”.

The problem for TVB is that a weakening ad environment threatens its income (57 per cent of revenues come from advertising), at a time when it requires capital to invest in digital services and pay-TV. For this reason, Citigroup last month downgraded its stock from ‘buy’ to ‘sell’.

According to Kwong, ATV is planning a public listing in five years.There is plenty of work to do to make that a reality. For both Hong Kong’s terrestrial players, those five years promise to include plenty of soul-searching.

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