Hong Kong Lawmakers Weigh Probe Into Granting of TV Permits

Hong Kong lawmakers are set to vote on a motion to probe Chief Executive Leung Chun-ying’s rejection of a startup’s application for a free-to-air television permit, a move that sparked protests demanding an explanation.

The proposed inquiry, scheduled to be voted on today, will look into why the government gave broadcast permits to PCCW Ltd. (8) and I-Cable Communications Ltd. (1097), both controlled by billionaires, while rejecting Hong Kong Television Network Ltd. (1137)

Tens of thousands marched in protest last month against Leung’s decision, pushing his popularity to near-record lows. The outcry over the licenses, the first granted in almost four decades, highlights the demand for choice in a market dominated by Television Broadcasts Ltd. (511) and concerns that Hong Kong’s policies lack accountability.

“There has never been a clear explanation and the rationale doesn’t make sense,” Charles Mok, a lawmaker representing the information technology sector, said by telephone before the vote. “We want to see the documents.”

Leung has struggled to gain broad public support since taking office in July last year, when he defeated front-runner Henry Tang, who had the support of tycoons including Asia’s richest man Li Ka-shing. Opposition lawmakers have since sought to pass votes of no confidence against Leung for his missteps.

The city said yesterday that a consultancy report showed Hong Kong’s free-to-air television market is unable to support five operators. Applicants were assessed based on their financial soundness, investment plans, and technical and program content, it said.

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Shares of Hong Kong Television fell 0.4 percent to HK$2.43 at 1:10 p.m. local time, taking the decline since its application was rejected to 21 percent. The company’s staff union is calling for a protest outside government headquarters at 6 p.m. tonight.

Advertisers spent an estimated HK$13 billion ($1.7 billion) in Hong Kong last year, with television accounting for about a third of that, Bank of America Corp.’s Merrill Lynch unit said in a February report, citing Magna Global.

Television Broadcasts’ flagship channel has a 93 percent audience share during prime time on weekdays, according to its 2012 interim report. Asia Television Ltd. is the city’s other incumbent free-to-air broadcaster.

Support Ratings

Public discontent in Hong Kong has soared in the past four years as home prices doubled to a record, and Asia’s worst wealth gap widened. While Leung has raised minimum wages, increased spending on the elderly, and imposed property curbs, opposition lawmakers have criticized him for a lack of integrity and transparency.

Leung’s support ratings fell 4.1 points to 44 on a scale of 0 to 100 after the Oct. 15 license decision, according to a survey of 1,018 people from Oct. 18 to 24 by the University of Hong Kong Public Opinion Programme.

Hong Kong Television, founded by Ricky Wong, said it would cut about 320 jobs after the application was rejected, spurring the workers to organize protests against the the government.

The applications were also assessed based on the market capitalization and profit levels of applicants and their parents, Leung said yesterday.

PCCW is controlled by billionaire Richard Li while I-Cable is a unit of billionaire Peter Woo’s Wharf Holdings Ltd. (4)

Wong started City Telecom Ltd. in the 1990s to challenge a monopoly on long distance calls. Last year, he sold the telecommunications assets to CVC Capital Partners Ltd. for HK$5 billion ($645 million) to fund his television operations.

To contact the reporter on this story: Simon Lee in Hong Kong at slee936@bloomberg.net

To contact the editor responsible for this story: Hwee Ann Tan at hatan@bloomberg.net

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