Hong Kong's richest tycoon Li Ka-shing has withdrawn an offer to buy a stake in local free-to-air broadcaster Asia Television (ATV), the day after it was revealed that the station has secured rights to broadcast on the Chinese mainland.
Li Ka-shing's multimedia company, Tom.com was set to become ATV's second biggest shareholder by acquiring a 32.75% stake from two companies in the cash-strapped Lai Sun group - property developer Lai Sun Development and eSun Holdings, the parent company of Hong Kong film studio Media Asia.
Tom.com stated it had pulled out of the deal because it is "unable to conduct any meaningful due diligence investigation". However, observers suggested that Lai Sun wanted to restructure the deal, as Chinese broadcasting rights would boost ATV's valuation.
At the same time, Tom.com is understood to have failed in a bid to buy out ATV's controlling shareholder, mainland entrepreneur Liu Changle. Liu - who also co-owns Phoenix Satellite Television with Rupert Murdoch's News Corp - revealed plans to acquire a 46% stake in ATV two months ago.
ATV announced yesterday (Aug 19) that it has become the first Hong Kong terrestrial station to be granted broadcasting rights for China. Its two free-to-air channels, ATV Home and ATV World, have been cleared for carriage on the Guangdong Cable TV network in Southern China, giving it an advantage over its main rival, Sir Run Run Shaw's TVB.
TVB currently has limited landing rights on the mainland for two satellite channels, but has yet to gain approval for its terrestrial channels, TVB Jade and TVB Pearl. The station also has a joint venture to launch a Chinese channel in partnership with state broadcaster China Central Television (CCTV), although the proposed channel is also waiting to receive the official nod.
Three other foreign broadcasters - Phoenix, News Corp's Star TV and CETV, owned by AOL Time Warner - were granted landing rights for Guangdong Province at the end of last year.
ATV and TVB's free broadcasts are already widely available on the mainland,where they are picked up and re-broadcast illegally by local cable operators. However neither station shares in China's TV advertising bonanza, as the rogue cable operators sell their own ads.