Hong Kong’s TVB Flustered by Shareholder Criticism of Losses, Investments and Boardroom Control

Television Broadcasts, Hong Kong’s leading free-to-air broadcaster, has said that it is considering legal action against a group of shareholder activists.

The shareholder group, seemingly led by Chow Ngai Keung and publishing its critiques on Facebook, has made a series of complaints about TVB.

These include the allegation that TVB is operating a streaming app Maiduidui in Mainland China without the proper authorization and that TVB has misled shareholders over the official name of the company that ultimately holds executive control.

The minority shareholders have also criticized TVB for investments in Mainland Chinese firm SMI and State Reserve Energy Bonds, which have cost the company HK$1 billion ($128 million) of losses, and for its 2021 acquisition of e-commerce platform Ztore.

The activists have also called for the replacement of six members of the board of directors, including Li Ruigang. Li heads Mainland Chinese media investment firm CMC, which is (indirectly) the largest single shareholder in TVB.

In a statement on Friday, TVB said that it “strongly denies the serious and defamatory allegations made by the Alliance […] against TVB and its board of directors. TVB is committed to conducting its business strictly in accordance with the applicable laws and regulations. We take the allegations very seriously and will take legal actions against the Alliance, author of the press release from the Alliance and all members of the Alliance.

It is the third time in a matter of months that TVB has threatened legal action against the shareholder group. No legal action has yet begun.

TVB has blamed the pandemic for many of its woes and says that it is now on a growth track. Other commentators have blamed competition from successful local digital competitors, weak programming and a business model that retains some 500 artistes on its payroll who play dual roles as performers and consumer goods marketeers.

“The market has been hit hard by the COVID-19 pandemic in the past few years. The global economy has been clouded by uncertainties and continues to underperform. All industries have suffered unprecedented economic losses, and TVB is no exception. Since the beginning of 2021, the group has carried out extensive reforms in order to actively embark on a path towards new media for the television industry. In the past two years, the new management team has reshaped and strengthened TVB brand’s solid foundations,” TVB said in a March 17 statement.

The company has lost money in each of the past five years. At the end of March, it revealed that losses for 2022 had increased to HK$807 million ($103 million), compared with HK$647 ($82.9 million) in 2021.

Part of the 2022 deficit was a HK$212 million ($27.1 million) non-cash provision against its investment in Imagine Tiger, a company jointly owned with Ron Howard and Brian Grazer’s Imagine Television.

In notes to its 2022 financial statement, TVB said that the media markets in Hong Kong and Mainland China are improving and that it expects “content buying activity by the major video platforms [to] pick up.”

The same statement revealed that it will cut content spending in 2023 and that 5% of staff will be affected by cuts to headcount.

In recent weeks, TVB has announced that two of its subsidiaries have struck an agreement to provide programming to Alibaba-owned Mainland Chinese streaming platform Youku. On Monday, it announced that it has begun production of English-language programming for its Hong Kong streaming app myTV Super.

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