TNAG-2763-FCO40-3980-Hong-Kong-licensing-framework-for-satellite-television-broad-1993 — Page 5

CONFIDENTIAL

XCC(93)148

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The licensing conditions proposed to be removed or modified are

those which provide for -

(a)

(b)

the corporate structure requirements and foreign ownership restriction imposed on licensees;

licence fee and royalty-type payments to Government; and

(c) the length of the licence.

These are further discussed below.

Foreign Ownership

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The foreign ownership restriction, i.e. the requirement that the aggregate foreign ownership does not exceed 49%, has become the major barrier for satellite television broadcasters who would like their programmes to be uplinked from Hong Kong. Unlike terrestrial television broadcasting, we see no grounds for insisting that the satellite television broadcaster should be locally controlled. These satellite television services are targeted for the region and are therefore not meant to meet the linguistic and cultural demands of Hong Kong viewers alone.

Majority of Directors to be Local

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Provided we are satisfied that the licensee company is Hong Kong based and is reputable, our concern should be solely to see that the programmes broadcast comply with standards prescribed in licence conditions and codes of practice. The licensee should, however, be required to have at least one local principal officer as a contact point for regulatory matters.

Licensee not to be a Subsidiary

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As regards television licensees not being subsidiaries of other companies, this Council, in the case of subscription television, has already directed that this restriction should not apply, as we could be closing the market to corporate investors and major groups that are comfortable operating through subsidiaries. One of the main reasons for the restriction