23.2 None of these shareholders is involved in programming. Programming expertise providing input into HCV's proposal consists of ex-TVB executives.
Robustness of Financials.
24. The consultants have analyzed the full financials submitted by HKCC and HCV. We have selected a number of qualitative issues within our competence for assessment. On certain areas of technical and financial assessment, however, for which we do not have the specialist expertise, we have not tried to reach any independent conclusions, but have relied upon the report submitted by the Consultants. We note the following from their report.
24.1 Revenue
24.1.1. The Consultants advise that HKCC has under-estimated the size of the market; and HCV has slightly over-estimated it (by taking hous- ing targets rather than realistic housing projections for their estimate of the total number of living quarters). Market forecasts are, however, a matter of subjective view and it is not considered that these differences in perception of the market would adversely affect the viability of either bid.
24.1.2. HKCC may have over-estimated penetration rates (by using estimates arrived at through market research as the lowest penetration they will achieve), while HCV's projected penetration rates are realistic.
21.1.3. If HKCC's over-estimate of penetration and HCV's over- estimate of the housing stock are reconciled, the resulting realistic sub- scriber-bases are closer to each other.
24.1.4.
HCV has risked a higher rate structure (if convertor rental is included) than HKCC. But HCV's programming package is likely to be more attractive to the local public.
24.1.5. Taking these three points together, the consultants suggest that HCV's revenue projections should be adjusted downwards by 10% and HKCC's by 11.5% to be more realistic.
24.1.6
The consultants also advised that HCV's estimate of advertis- ing revenue was unlikely to be achieved: HKCC's was more realistic. HKCC had allowed for no revenue from programme licensing, whereas some revenue should be forthcoming from this source. HCV had made a realistic estimate of licensing revenue.
24.2 Costs
24.2.1.
The consultants advise that HKCC and HCV have both made reasonable estimates of technical/network costs, marketing costs and administration costs.
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