TVB to receive HK$700m funding from CMC and Young Lion as it expects HK$420m loss

Local broadcaster TVB will receive up to HK$700 million from CMC Inc.(華人文化) and Young Lion Holdings, after it estimated its interim net loss might be widen yearly to between HK$400m and HK$420m.

According to a statement released by TVB on 14 August, the broadcaster has entered into a funding agreement with CMC and Young Lion Holdings for new loan financing. The two companies will provide TVB with up to HK$700 million in borrowing facilities to support its ongoing business and operating needs.

These facilities shall be available up to 31 December 2024, and bear an annual interest of HIBOR + 1.25%, which is lower than the company’s current market cost of borrowing. 

Commenting on the move, Li Ruigang, chairman of CMC Inc., said, “TVB continues to be Hong Kong’s dominant television platform and content producer, with tremendous reach also among Mainland Chinese and other Chinese-speaking audiences around the world."

"While the business environment has been challenging in the past few years, I am confident of the company’s prospects, and fully support its ongoing recovery and transformation efforts. With this additional funding, the company can also better capture the many new business opportunities available in the market," he added.

Meanwhile, Thomas Hui, executive chairman of TVB said, “We thank CMC Inc. and Young Lion Holdings for their support, and for their continued confidence in our management team. Despite a challenging environment in Hong Kong and Mainland China earlier this year, which has weighed on our performance so far in 2023, TVB remains firmly on a turn-around track. Our first half results for 2023 are already an improvement on the second half of 2022, and we should also see further improvement in the second half of 2023, as we continue to deliver on key projects and initiatives.”

This comes as TVB expects to record an EBITDA loss of between HK$180m and HK$190 m, and a loss attributable to equity holders of the company of between HK$400m and HK$420m for the first half of 2023.

According to a filing on Hong Kong Stock Exchange, TVB said based on a preliminary assessment of the unaudited consolidated management accounts of the group for the first half of 2023, the group’s revenue declined by 14% to HK$1,560m, compared to HK$1,820m in the same period of 2022.

As Hong Kong’s post-COVID economic recovery continued at a modest pace, the company saw improved demand for advertising on its TV platforms, which led to an increase in our advertising income. However, as Hong Kong’s shoppers returned to more traditional shopping habits after the pandemic, the environment for its eCommerce business was less favourable, said the statement. This led to an overall decline in eCommerce revenue during the first half of the year. 

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Moving on, the company expects a larger revenue contribution as it gradually ramps up its livestreaming sessions. For example, the group previously signed a RMB700 million content output and supply contract with Youku, a video streaming platform in China. Furthermore, it also expects the cost-cutting measures to continue to contribute to the improvement of the group’s financial performances.

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