TNAG-2276-FCO40-3275-Hong-Kong-and-the-media-1991 — Page 102

RESTRICTED COMMERCIAL IN CONFIDENCE

RESTRICTED

COMMERCIAL IN CONFIDENCE

FM HONG KONG

TO IMMEDIATE FCO

TELNO 1843

OF 07112OZ JUNE 91

INFO IMMEDIATE BTC HONG KONG

INFO ROUTINE PEKING

Маз за

sali

126616

MDHIAN 0218

p.a. Media

75

YOUR TELNO 1073: BBC WORLD SERVICE TELEVISION AND HUTCHISON

1.

WE DO NOT WISH TO DISCOURAGE HUTCHISON (HV) FROM NEGOTIATING WITH BBC WORLD SERVICE TELEVISION (WSTV) AND BELIEVE THAT WSTV PROGRAMMING WILL ENHANCE HV'S SERVICE TO ASIA. HOWEVER, WE DO NOT ACCEPT THAT CANTONESE PROGRAMMING IS ESSENTIAL TO THE DEAL. WE SUSPECT THAT THIS IS A PLOY BY LI TO BRING PRESSURE TO BEAR ON US TO REMOVE A LICENCE CONDITION THAT HV HAVE ACCEPTED BUT WOULD

LIKE TO GET OUT OF.

2. THE RESTRICTIONS ON CANTONESE PROGRAMMING WERE INTRODUCED TO PROTECT HONG KONG'S TWO TERRESTRIAL BROADCASTERS, WHICH ARE DEPENDENT ON ADVERTISING AND NOT VERY HEALTHY FINANCIALLY. ONE (ATV) HAS SUFFERED LOSSES FOR YEARS. THE OTHER (TVB) MAKES MUCH OF ITS PROFIT FROM OVERSEAS PROGRAMME AND VIDEO DISTRIBUTION. THE LOCAL TV ADVERTISING MARKET IS NOT BIG ENOUGH TO SUPPORT ANOTHER CANTONESE-LANGUAGE ADVERTISING-DRIVEN SERVICE.

3 =

LI'S CLAIM THAT CANTONESE PROGRAMMING IS NECESSARY TO ATTRACT ADVERTISERS DOES NOT SQUARE WITH WHAT HV HAVE TOLD US IN THE PAST. HV IS AN ASIA-WIDE SERVICE AND HONG KONG IS THE ONLY LARGE CANTONESE-SPEAKING MARKET IN ASIA. THIS CANTONESE-SPEAKING MARKET REPRESENTS ONLY A FRACTION OF HV'S TOTAL POTENTIAL MARKET. HV HAVE CONSISTENTLY TOLD US THAT THE HK DOMESTIC ADVERTISING MARKET WOULD CONSTITUTE ONLY A VERY SMALL FRACTION OF THEIR REVENUES (THEY HAVE PREVIOUSLY ESTIMATED 4 PER CENT).

WE BELIEVE THAT PROTECTING OUR TERRESTRIAL BROADCASTERS, WHO SERVE 98 PER CENT OF OUR POPULATION, IS MORE IMPORTANT THAN FRACTIONALLY INCREASING HV'S AUDIENCE. WE ARE LIKELY TO REVIEW THE CONTINUING NEED FOR THIS RESTRICTION WITHIN THIS YEAR, AS PART OF THE FORMULATION OF OUR OVERALL BROADCASTING STRATEGY. BUT WE ARE FIRMLY OPPOSED TO HV'S LOBBYING US INTO PREMATURE, AD HOC AND PIECEMEAL ACTION.

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RESTRICTED COMMERCIAL IN CONFIDENCE