TVB has to bite the bullet to make a turnaround
Dwindling advertising revenue and the growing popularity of set-top box has put Television Broadcasts Ltd (TVB), which has a virtual monopoly in free-to-air terrestrial TV broadcasting, in a dilemma.
Earlier this week, TVB issued a profit warning, saying it expects profit attributable to shareholders for 2016 to fall between 55 and 65 percent from that of the previous year. The company’s profit for 2015 slipped 6 percent to HK$1.33 billion.
In a statement, TVB blamed declining advertising spending for the loss of revenue. This is hardly surprising. The shift of a larger share of shrunken advertising spending to the internet is widely acknowledged. But, the magnitude of the impact on TVB’s results, based on the company’s latest performance, has caught many stock analysts off guard.
With its last major competitor gone, TVB will have to look at itself to identify the root cause of the problem, which may lie in its perceived inability to produce programs to draw younger viewers. The reported fall in the ratings of its various TV drama series shown during prime time viewing indicates that TVB is falling behind the times.
Buying programs from South Korea or the Chinese mainland won’t be of much help because they appeal only to a small segment of the local audience. The old story lines and tiresome formats of the many T VB programs that had won a huge following of fans in the past have lost their magic.
In du s t r y in s i d e r s h av e repeatedly pointed out that TVB must make a clean break from its established corporate culture to stay relevant to the new entertainment world. But, making changes is a tough call for a company that has as illustrious a past as TVB.
If it abandons the old success formula, the TV station risks alienating its still sizeable, albeit aging, core audience without any guarantee of winning over new followers. For that reason, the company management’s reluctance to make drastic changes in program production is understandable.
TV B ’s co r p o r a t e pe r f o r - mance in recent years has shown that making incremental changes is not going to be of much help. Not many younger viewers are impressed by the familiar faces and customary antics of the many aging entertainers
Without a clean break from the past, no matter how illustrious it had been, TVB may not have a bright future.”
who appear frequently on the station’s variety shows.
Without a clean break from the past, no matter how illustrious it had been, TVB may not have a bright future.