TNAG-1695-FCO40-2351-Future-of-Hong-Kong-nationality-1987 — Page 30

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Perhaps most important, the pilot would not be testing the programming model with which Hutchison CableVision intend to proceed. As you may recall our model requires a substantial production facility to be created, with the core of our survice comprising new programming in Cantonese. No company could afford to invest the sums required to set up such production purely for pilot testing.

To allow the pilot to proceed would in our opinion be seriously prejudicial to the licensing process, partly because of the delay it would introduce but also because the result would be substantially within the control of one of the contenders. Failure of the pilot for whatever reason could be damaging to the development of cable television in Hong Kong. I therefore trust that the request will not be granted, and should point out that were it to be allowed to proceed, our shareholders would have to seriously consider withdrawal from the project.

I referred above to the development of a new local production facility as part of our plans. I will be sending you shortly further details with regard to the volume of such production as part of our separate argument for the existence of only one franchise area covering the whole of Hong Kong.

Yours sincerely,

аз

Melvyn J. Sears General Manager

MJS/af

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