27 October 2016
HKTV chairman Ricky Wong Wai-kay has burned about HK$1 billion over the past three years for his media business. Photo: HKEJ
HKTV chairman Ricky Wong Wai-kay has burned about HK$1 billion over the past three years for his media business. Photo: HKEJ

Nightmare continues before dream comes true for Ricky Wong

How much are you willing to sacrifice for your dream?

For Ricky Wong Wai-kay, it’s HK$1 billion and counting – not to mention his three years of hard work.

His Hong Kong Television Network (HKTV) issued a profit warning on Tuesday, saying that it expects to post a significant increase in losses, over 200 percent, for last year, compared with the 16 months ended December 31, 2014.

That suggests that HKTV would probably report a loss of at least HK$711 million for the year because it booked a loss of HK$237 million in 2014, marking the third consecutive year of losses that have reached HK$977 million since 2012.

The huge deficit, according to the company, is mainly attributable to the impairment loss on certain assets resulting from the uncertainties in the media business, and the increase in program costs during the period.

Although its programs received heartwarming comments from the public, the revenue from licensing those program rights and net advertising income did not increase proportionally.

Worse still, the company’s online shopping business, which was officially launched in February 2015, was still in its early investment stage to be financially material to the group, it said.

Wong has struggled for five years since he sold his broadband network to CVC Group for HK$5 billion in 2012.

Wong had originally planned to cash out from the network and invest half of the proceeds to his pay TV business in the hope of taking on Television Broadcasts for a share of the HK$5 billion TV advertising market.

Unfortunately, things didn’t work out according to his plans. The change of regime to Leung Chun-ying from Donald Tsang Yum-kuen, who promised Wong a free-TV license, means a change in the rules of the game, preventing the ambitious tycoon from getting into the business.

Those who are familiar with the capricious winds of politics would have called a halt to the business plan, but not Wong, who is known as the David who beat the Goliath in the telecom industry. 

The opportunity cost for Wong has never been higher. Had he held on the broadband business, he would have owned HK$10 billion worth of stake in Hong Kong Broadband (HKBN), which acquired smaller rival New World Telecom for HK$650 million last month.

By comparison, HKTV was valued at a mere HK$1.4 billion, although its new asset value was more than HK$3 billion.

After paying out special dividends from HKBN, HKTV is now left with HK$1.7 billion in cash despite the cash-draining losses of the past three years.

Earlier this week, Wong told a television forum that he is still continuing to expand the TV business in a “bloody and sweaty” way and preparing for the next challenges to come.

His company is building its TV headquarters in Tseung Kwan O with three studios totaling 10,000 square feet.

Only Wong knows how much the cost of waiting really is.

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EJ Insight writer

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