Photographer: Brent Lewin/Bloomberg

Hong Kong Regulator Voices Concerns About TVB's Ownership

  • Regulator says TVB is masking influence of Chinese mogul
  • SFC plans to share findings with Communications Authority

Hong Kong’s securities regulator voiced concerns about Television Broadcasts Ltd.’s ownership, saying the city’s dominant free-to-air broadcaster is masking the influence of Chinese media tycoon Li Ruigang.

TVB should tell shareholders that, contrary to what public disclosures indicate, Li’s CMC Holdings Ltd. has the ability to make various decisions at TVB’s controlling shareholder, Young Lion Holdings Ltd., according to a Securities and Futures Commission panel review disclosed on Wednesday. The panel plans to share its findings with Hong Kong’s Communications Authority for review, it said.

The panel findings -- disputed by TVB’s legal advisers -- threaten to roil the broadcaster because Hong Kong places restrictions on non-residents owning its TV companies.

To read a Gadfly column on the regulator’s concerns about TVB, click here

While the majority of voting shares at Young Lion Holdings are controlled by local businessman Charles Chan, Li’s CMC controls a 79 percent stake when including non-voting shares, according to the panel. The non-voting shares, which hadn’t been publicly disclosed previously, matter because they count in deciding various matters at Young Lion such as the appointment of independent directors, according to the SFC.

A representative at TVB said the company plans to issue a response to the SFC statement, while representatives at CMC and for Charles Chan couldn’t immediately be reached.

The regulator also said that it has questions about CMC’s own ownership and whether Li indeed has the control that his 86 percent stake indicates, according to the panel.

The ownership concerns emerged as the panel was reviewing a TVB application for a waiver on a buyback plan the company has been proposing. The panel said that TVB’s obligation to make a general offer can be waived if the buyback is approved by minority shareholders. TVB’s second-largest shareholder, Silchester International Investors LLP, has voiced concerns about the buyback plan.

The panel findings come months after TVB received an unsolicited takeover approach from TLG Movie & Entertainment Group Ltd. -- a plan that was subsequently dropped.

TVB shares have been suspended from trading since April 28. They last closed at HK$29.90.

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