(iii) Royalty should also be charged on the CTV broadcasting licensee to ensure a public share in the benefits accruing limited
(iv)
(v)
(vi)
(vii)
to
the
licensee
from
competition. On 6 September 1988,
considering
memorandum
after XCC (88) 127, the Council ADVISED and the Governor ORDERED that bidders should be invited to submit their own
proposals on the payment of royalty based on gross receipt s (ie income derived from the subscription fee and advertising revenue).
Both HKCC and HCV have submitted detailed proposals for royalty payment.
HKCC has proposed to pay a royalty of 10% of gross receipt s comprising advertising and subscription revenue throughout the
15-year
licence period. If discounted in net present value terms, the royalty proposal remains at 10% of gross receipts.
HCV has proposed a
the
revenue
11
is
into
to
>
and
more complex formula which divides the royalty package
advertising subscription royalties. Royalty on advertising revenue will be charged on same basis as wireless TV broadcasters.
However advertising be split into advertising" and 'sponsorship" with the latter
not generating royalty. Royalty on subscription revenue will not be paid until the
the ninth year of operation and several sources will be excluded. HCV's approach
approach is based the rationale that they wish to limit the financial burden in the years of heavy financial commitment and risk, but that they are willing to contribute once the project generates cash flow for the shareholders. The consultants have calculated that HCV's proposals amount to an overall average of 4.7% of gross receipts. If discounted in net present value terms this amounts to 3.7% of gross receipts.
The royalty clearly more HCV.
Given
prepared to
on
•
,
proposal by HKCC is generous than that by what HKCC has been offer, the royalty