Challenges ahead after higher costs erode TVB profit

Concerns grow over ad spending amid change in viewing habits and slow rebound in China, USFree-to-air channel Television Broadcasts (TVB) reported a 9 per cent decline in net profit to HK$770 million for the six months to June on higher costs.儲存Total costs, including cost of sales, selling, distribution and transmission expenses, and general and administrative expenses, increased 15 per cent to HK$1.66 billion from a year earlier.Turnover grew 6 per cent to HK$2.6 billion.TVB said in a filing to the Hong Kong stock exchange that this year remained challenging as the sluggish recovery of the economy in mainland China and the United States "may limit growth in advertising spending during the second half".During the first half of the year, makers of infant milk formula remained the highest-spending advertisers, TVB said. Mobile-phone and equipment companies also spent more advertising dollars to support the launch of new products, contributing substantially to revenue, the firm said."To ensure that we are capturing the advertising spending in the second half of the year, our新蒲崗迷你倉immediate priority is to further strengthen our programming on terrestrial channels," executive chairman Norman Leung Nai-pang said in the filing.Television operators are facing a growing challenge from internet companies as the audience, especially the younger generation, shift viewing habits from watching programmes on television to computer or other mobile terminals.Hong Kong remains TVB's most important market, with turnover for television broadcasting rising 9 per cent to HK$1.46 billion.Currently, there is a cosy duopoly in the city's free-to-air television market between TVB and Asia Television. However, three newcomers have applied to join the fray, including Ricky Wong Wai-kay's Hong Kong Television Network and Richard Li Tzar-kai's HK Television and Entertainment. It is not clear when the government will issue free-to-air licences to the new entrants.The company declared an interim dividend of 60 HK cents per share, the same as last year.Shares in TVB dropped 2.1 per cent to close at HK$52.50 yesterday, compared with a 0.7 per cent decline in the broader market.mini storage