18 April 2019
ATV is a victim of Hong Kong's closed broadcast licensing system that discourages open competition. Photo: HKEJ
ATV is a victim of Hong Kong's closed broadcast licensing system that discourages open competition. Photo: HKEJ

Why ATV should be allowed to die

At this writing, Asia Television Ltd. (ATV), the smaller of Hong Kong’s terrestrial broadcasters, was yet to pay its employees their November salary.

If the embattled company is unable to make the payment much longer, the government could begin a process to see if it’s in breach of its license.

That could be the beginning of the end for the 54-year-old broadcaster unless it’s thrown a lifeline at the last minute.

If there was anything of the kind, it would have come already. Also, there’s no sign its shareholders are going to cough up the money.

These alone make it likely that ATV’s future lies entirely in the hands of the government.

So what to do?

Leung Chun-ying’s government could allow a bailout but that would be throwing good money after bad.

Given ATV’s history of financial instability, the company is better off being allowed to die.

Any such decision, however, should consider the interests of its employees and minority investors above all else.

There are reports ATV is planning to file a claim with the Labor Department to tap the Insolvency Fund in order to meet its November payroll by the end of this month.

Failing that, ATV will be forced to shut down its newsroom from Jan. 1.

ATV has been grappling with financial problems for some time but it was not until recently that reports emerged about payroll delays of several months.

Curiously, the Communications Authority, Hong Kong’s media regulator, neither voiced its concern nor warned ATV that it could be in breach of its license conditions.

The authority has the power to revoke ATV’s license to avoid further harm to the company, its shareholders, employees and creditors.

ATV’s license will expire in November next year but its renewal application, which would allow it to operate for another 15 years, is pending review by the government.

It’s possible the government is giving ATV every chance to sort out its affairs, or giving potential buyers enough time to conduct due diligence.

The best outcome is an outright sale of the business. The worst is a creeping sense that all this is merely prolonging the life of a dying patient.

Meanwhile, public interest is not served by the protracted saga. There are signs Hong Kong people, already feeling short-changed by the deteriorating quality of ATV programs, are getting fed up with government inaction.

The government cannot justify a license renewal for a company with such lackluster governance and spotty regulatory compliance.

But allowing ATV to die will not solve the problems inherent in Hong Kong’s broadcast licensing system unless the government opens the free-to-air industry to competition.

It has been a two-horse race between ATV and its bigger rival, Television Broadcasts Ltd., which in recent months has also drawn complaints about its slipping program quality.

Which is why last year’s refusal by the government to issue a third license  – to Ricky Wong’s Hong Kong Television Network Ltd. — on the grounds of unhealthy market competition, was widely criticized.

ATV’s troubles are hurting the public but it’s the employees who are suffering the most pain.

They have no say in their own future but they must deal with the fallout from the squabbling between two key players — Wang Zheng and and Taiwan food tycoon Tsai Eng Meng.

Tsai, a shareholder since 2009, accused Wang of interference in ATV’s business operations and bypassing the board.

Last week, a Hong Kong court ruled that Wang’s actions were illegal and granted Tsai leave to name an independent auditor to examine ATV’s accounts.

Tsai could step forward to save the company or stand back to let events run their course.

With the financial wherewithal to operate a broadcast business on his own, Tsai could quit ATV and start from scratch, although as a non-Hong Kong citizen, he will need a local partner for the new venture.

And as for the government, it should be a little more broad-minded this time around. 

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EJ Insight writer

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