Hong Kong Refused TV Licence to Applicant OKed by Regulator

Hong Kong’s broadcasting regulator said it recommended the approval of all three applications for new free TV licenses, including the one rejected by city Chief Executive Leung Chun-ying.

Hong Kong Television Network Ltd. (1137), PCCW Ltd. (8) and i-Cable Communications Ltd. all met financial, technical and managerial criteria, according to a letter and document dated Nov. 7 from Hong Kong’s Communications Authority to legislators. The missive followed Leung and his cabinet’s rejection of H.K. TV Network’s bid last month, when they gave licenses to the other two broadcasters.

“The Authority considered it best in the public interest to recommend the grant of licenses to those which met the relevant requirements,” according to the document. “On the whole, the Authority considered that all three applicants had demonstrated their compliance.” Ranking the applications wasn’t “necessary or appropriate,” it said.

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. Legislators on Nov. 7 voted against conducting an inquiry into the decision.

‘Very Unusual’

“It is very unusual for the government and the Executive Council to make a decision without taking into account an industry regulator’s recommendation,” Albert Chan Wai Yip, a lawmaker from the People Power party, said by phone today. “I have never seen this happen in other industries such as telecommunications and ports.”

Chan said there may be political considerations in the licensing decision and the Legislative Council will continue follow up the situation.

The Executive Council may have abused its power on the licensing decision, Civic Party legislator Dennis Kwok said today. The Legco panel on Information Technology and Broadcasting plans to invite Communications Authority Chairman Ambrose Ho to elaborate further on its recommendations, Kwok said in a phone interview.

Four phone calls to the Commerce and Economic Development Bureau, which oversees the TV licensing issues, seeking comments about the broadcasting regulator’s recommendations went unanswered today.

Waning Support

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.

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.

The city said earlier this month that a consultant’s 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.

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.

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

To contact the reporter on this story: Joshua Fellman in New York at jfellman@bloomberg.net

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

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