Tuesday, May 20, 2008

Raiders Of TVB

Country Garden's Yeung Kwok-keung is apparently the front-runner in the bidding for Run Run Shaws indirect stake in Television Broadcasts Ltd (0511), after he secured HK$3 billion in financing from Lee Shau-kee, the Henderson Land chairman and also sometimes known as HK's Warren Buffett, that gives him a clear edge over the other suitors.

Yeung has been interested in acquiring Run Run Shaws stake in holding company Shaw Brothers (0080) for at least six months. The Country Garden chairman may have outbid the other potential suitors. Several foreign private-equity firms are said to be vying with Yeung to take over the Shaw Brothers stake, but the chance for their bids to be successful is believed to be slim considering the present market conditions

There have been rumors in the market for years that various parties had approached Run Run Shaw, who is now 100, about taking control of Hong Kong's most influential media outlet. The deals always fell through because of the high premium sought by Shaw. The source said it is unlikely a foreign private-equity firm would be willing to pay Shaw's asking price, while Yeung is comfortable with the price tag. The credit crunch in the West could also make it more difficult for private-equity firms to line up funding.

One reason for Yeung's aggressiveness in bidding for control of TVB is that having an interest in a Hong Kong media and entertainment company would significantly raise his profile and status in Hong Kong, something Yeung is keen to do. Yeung, who was born in Foshan, Guangdong province, and worked as a farmer, boatman and construction worker before founding his property company, has no previous business ventures in the media field.

Run Run Shaw has a total beneficial interest of 32.49 percent in TVB. Holding company Shaw Brothers, in which Shaw has a 75 percent interest, is the single largest shareholder in TVB with a 26 percent stake. The Shaw Foundation Hong Kong Ltd holds a 6.23 percent stake in TVB.

Acquiring Run Run Shaw's stake in Shaw Brothers would likely require between HK$10 billion and HK$11 billion, according to the source, so Yeung would need to secure additional financing from banks to clinch the deal.

The apparent deal still makes little sense to me. One would think that Run Run Shaw would have "higher objectives" in offloading TVB, not just on price alone, but to ensure that the longevity and continued growth path of TVB be secured. Selling to the Country Garden's chairman is like selling to Vincent Tan, where got difference? If its HK$10 billion, I am sure Ananda Krishnan would be falling over himself to buy TVB, if he is not then he has some very poor advisors by his side. The balance sheet of Astro may not be able to take the whole deal, may have to be shared with Usaha Tegas first - then take Astro private - that would be the way to go.

p/s photo: Nasha Aziz


Valueguy said...

HK is the financial center of China.
TVB is the most prominent TV operator in Hong Kong.

On the other hand, AK is an Indian and is known to have close relation with India's circle of power.

Do you think China gov want someone like AK to control TVB?

My point is AK may want to have TVB. But in reality, it is a impossible dream.

You have been speculated that recent run in Astro share price has something to do with TVB. unfortunately, it is not. Astro share price was moved by EPF. On 13 May, Astro share jump ~20 sen with ~6 million share transacted. In that, EPF responsible for 2.5 million transacted shares. Most importantly, EPF sold more shares than buying it on that day.

yj said...

country garden made an announcement to HK exchange denying the news....I think Valueguy is wrong in this case...it's got nothing to do with ethnicity of AK...this is a purely a business deal and I agree with Dali that selling the stakes to Yeung would not be a good decision. I find it very amusing that after building the show business empire by sir run run for such a long time and the amount of wealth they already have...obviously they need to look beyond the $$. For me the continuity of the business,preserving the brand name and historical aspect of the TVB business and future expansions are more important. This is where I think AK will stand out against the rest:
1) AK paid huge amt of money for purchase of shaw titles...and thru celestial many of these old movies successfully penetrated into the west for the cable and sat TV market.It opened a new market for asian movies. Today we see many new asian movies frequently in the blockbuster lists.
2) AK really make an effort to promote and bring and market TVB brandname to mass TV viewers..i will not be suprise if later we see TVB series being shown in India.
3) 2009 Astro will probably be starting a HD Sat TV programming. This is a huge potential. Looking at the Jap..and US success I think Astro will make a big impact for Asean and India's market.

Even tho u may call it a long shot but until the official announcement is out. I still think he has a good chance of winning the bid.

Valueguy said...

you missed the point. I know Ak is a competent man. But, media is not a normal business, especially in country like China. even in US, Rupert Murdoch has to convert his citizenship before owning Fox network.

Nevertheless, Astro has come out to deny about privatization and TVB affairs. check Bursa announcement for this.

Salvatore_Dali said...


I really think you are reading too much into the "racial thing". You speak like a protectionist. TVB is an important asset, but its not the MAIN broadcast channels, and it barely gets broadcasted into southern China.

The need to control the media has already been fulfilled. Rupert Murdoch also not Chinese la... or u only sell to a person with a Chinese wife, that one Ananda no-problem one...

I don't think commenting the issue based on racial lines is progressive or even realistic in this day and age.

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