Members will recall that argument s for the restrictions on the corporate structure of the licensee and on the range of businesses which may be undertaken by a licensee or its subsidiaries were presented previously in connection with the renewal of the wireless television licences. They are-
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(a)
(b)
(c)
(d)
by the simple means of establishing a holding company of which the licensee becomes a subsidiary all the controls and regulatory mechanisms imposed on the licensee are compromised, because the holding company is not subject to the same supervision;
a
licence
is granted after careful consideration to a company deemed worthy
worthy of it. No other company should be in a position to control or manipulate the licensee for what ever purposes. A licensee would have greater difficulty in resisting pressures from associated or interlocking companies;
a licensee should not be able to corner
particular areas of a market on the strength of its licence to broadcast. A complaint was raised against TVB Ltd. in 1986 that the company gave preferential promotion to singers contracted with one of its subsidiaries. A corporate structure in which the
in which the licensee is part of a network of associated and subsidiary companies gives rise to opportunities for such preferential treatment; and
the Financial
Secretary, without having to make tortuous investigations to ascertain whether connected companies are being held at arm's length or otherwise, should be able to make a proper calculation of the amount of royalty due.
At present, the licensee company, CRHK has under its corporate umbrella eleven subsidiaries engaged in a wide variety of business activities (Annex I). If the BRB's recommendations are to be implemented, as it is recommended that they should be, CRHK would have to hive off most, if not all, of these subsidiary businesses. The Chairman of CRHK has indicated in informal discussions with the Administration that object to hiving off all of these subsidiaries.
Disqualified persons
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not
'Disqualified person' is a term used in the Television Ordinance to denote a person (including a company) whose interests might be in conflict with that of a television
CONFIDENTIAL