Either its new, politically-connected controlling shareholder delivered or the reforms of China's television industry provided the unexpected bonus of landing rights for China's wealthiest province to Hong Kong underdog station, Asia Television (ATV).
Whatever the case, the bigger challenge is how ATV will use this coup over its more formidable rival Television Broadcasts (TVB) to transform itself into the TV station of choice for advertisers in the Pearl River Delta. In effect, the granting of landing rights by the State Administration for Radio, Film and Television (SARFT) merely legitimises the broadcast of ATV's two free-to-air channels in Guangdong.
But SARFT's endorsement - granted within weeks of former PLA officer Liu Changle buying a 46 per cent stake in the station - puts ATV in an enviable position. It joins a small coterie of broadcasters - Star, Phoenix and AOL Time Warner - to be granted landing rights. Yet, the seeming ease at which it secured China's approval belies the more immense challenge it now faces. First off, ATV must confront the issue of ad splicing by Guangdong's rogue cable operators. Hand-in-hand with that, the station will need to improve its programming line-up to build viewership.
As a legitimate broadcaster, ATV should enjoy greater leverage in rate negotiations with advertisers - that's the theory at least. But it can expect opposition. Steven Chang, managing director of Equinox, Zenith Media, warns: "If ATV is in control of advertising in Guangdong, there is the question of how much it will charge as a whole (including China and Hong Kong) or how it will split the rate."
Nevertheless, Chang sees benefits in legitimising ATV's status. "If operations are under the control of ATV, then it will be a more international way of operating in China's TV scene, which of course ad agencies and advertisers will welcome."
Even with landing rights, ATV and TVB have long dominated the Pearl River Delta's airwaves, taking about two-thirds of the total viewership. In Hong Kong, the ad split is generally 70 to 30 per cent in TVB's favour.
The channel has about 40 per cent viewership share in the Delta region, with ATV accounting for slightly more than 20 per cent. The remainder is split between local channels such as GZ34, Zhujiang TV and local drama channels.
Zoe Tan, Zenith's vice-president for strategic resources, notes that ingrained viewing habits, encouraged by better production values, have led Guangdong viewers to turn to Hong Kong channels. Tan believes the viewership gap between the two is smaller as ATV has carved out a niche for itself by importing more Chinese programming. "The TV market in Guangdong is a very different ball game. (China's national broadcaster) CCTV is almost non-existent in Guangdong, except when there are special events such as the World Cup broadcasts."
To capture this lucrative market, it's likely that ATV will develop a schedule based on mainland viewer interests. And that could include toeing the party line. A source at ATV said the station had already set boundaries on news issues deemed sensitive by mainland authorities.
Simon Woodward, MindShare China national buying and implementation director, says: "There are already a plethora of channels in Guangdong. It is a unique landscape. Relative to other markets, there is a lot of media choice for viewers. When there are additional channel choices, such as TVB, average viewing hours do not increase. Good programming will attract viewers and in turn advertisers. Therefore the channel with the progressive quality will emerge as the market leader, particularly in a fragmented market such as Guangdong."
For now, ATV must negotiate with Guangdong's cable operators for revenue.
Hong Kong's two stations have long had their programmes picked up by rouge cable operators in Guangdong, who insert other ads during commercial breaks, denying advertising revenue to the pair. ATV estimates the hijacked advertising to be worth Rmb 1.5 billion (US$181.2 million) in a market that generates about $2.4 billion in ad revenue. Guangdong operators in fact rely heavily on the air-time sales of ATV and TVB, and are unable to generate nearly as much sales revenue from their 'locally produced programming'.
Zenith's Tan says it will take a lot of negotiation and a "win-win mentality to reach agreement. "Phoenix TV was officially given the broadcast rights to Guangdong early this year, but the revenue issue remains unresolved."
GUANGZHOU VIEWING FARE: TVB LEADS ATV IN AUDIENCE SHARE
Whole Day TV Whole Day Market
Rating % Share %
City - TVB Jade (Chinese) 2.3 17.5
Province - TVB Jade (Chinese) 2.2 16.4
City - ATV Home (Chinese) 1.4 10.2
Province - ATV Home (Chinese) 1.2 8.7
Guangtong, Zhujiang TV 1.1 8.4
Source: CSM
