TV broadcasting (00511.HK): TV broadcasting and e-commerce business restructuring to improve operational efficiency

安信證券 ·  Dec 11, 2023 15:50  · Researches

Event: Television Broadcasting (TVB) is one of the world's largest Chinese-language commercial program producers. It is headquartered in Hong Kong. Its revenue mainly comes from Hong Kong television broadcasting business, OTT streaming business, e-commerce business, mainland China business, and international business. Among them, Hong Kong's television broadcasting business includes Hong Kong's free terrestrial television business and related activities such as content production, broadcast operation, artist management, music entertainment, and publishing. In March 2023, TVB and Taobao launched a live broadcast room, which attracted investors' attention. Recently, TVB issued an announcement announcing the restructuring of TV broadcasting and e-commerce businesses to enhance audience and user experience, increase operating efficiency and enhance long-term revenue potential.

Report summary

The revenue of 23H1, a leading media leader in Hong Kong with diversified business, increased 5% year-on-year to HK$628 million. Among them, the OTT streaming business (which mainly includes Hong Kong's MyTV SUPER streaming business, which provides free and paid services through set-top boxes, smart TVs and apps, and currently has more than 10 million registered users) 23H1 revenue fell slightly to HK$168 million; e-commerce business saw a slight decrease of 1% to HK$168 million and HK$316 million, respectively, due to changes in consumption patterns after the opening up of the e-commerce business, 23H1 revenue and GMV declined 41% and 39% respectively to HK$271 million and HK$311 million, respectively. E-commerce cooperation and focus on high-profit products to raise profit levels; the revenue of the mainland China business mainly comes from providing co-productions to major mainland video platforms (such as Youku, Tencent Video, Migu, and BaTV) and distributing simultaneous dramas, stock dramas and other content. At the same time, it also provides streaming services and operates MCN business to mainland viewers through the “Buried Heap” brand. As this year's co-productions and simultaneous series schedule are concentrated in the second half of the year, 23H1 revenue fell 22% year-on-year to HK$313 million; the international business included content industry distribution, AnyB, etc. Where streaming service Also, the official accounts of third-party social media and video streaming platforms (such as YouTube and Facebook) were affected by the decline in distribution revenue from Malaysia and Vietnam. 23H1 revenue fell 6% year on year to HK$180 million.

Starting the path of live e-commerce and bringing new room for growth On March 7, 2023, TVB and Taobao began a live streaming tour in the style of live streaming of Hong Kong dramas through the live broadcast “TVB Discovery”. Their famous entertainers entered the Taobao live broadcast room. The cumulative live broadcast time was 6 hours, the number of viewers exceeded 4.85 million, and the GMV of the second live broadcast reached 73.2 million. The GMV for the second live broadcast reached 73.2 million, three times that of the first live broadcast, and the cumulative number of viewers reached 6.9 million.

By the end of Q3, TVB had delivered more than 250 million GMV within 6 months of starting the live broadcast. The rise of live e-commerce in recent years has injected new vitality into the entire e-commerce circuit, and TVB's launch of live e-commerce has also brought more room for growth to the business.

The co-production film “News Queen” topped the list, and TVB's 56th anniversary Taiwanese drama “The News Queen” recently became popular after it began broadcasting. The film was a co-production and was broadcast on Youku. Because of its fast-paced plot, lots of lines, and surrounding popular topics such as women in the workplace, the film received a lot of buzz from viewers. Whether it was the story or TVB's “conscientious production,” it was widely discussed. Douban's ratings for “The Queen of News” soared all the way up to 8.2 points, becoming Douban's highest-rated Hong Kong drama of the year. It also brought back attention to dramas produced by TVB. I believe there will be more exciting productions in future dramas to be broadcast.

The business restructuring is expected to bring about improvements in operating efficiency and revenue growth. The company previously issued an announcement announcing the restructuring of television broadcasting and e-commerce businesses. In terms of television and broadcasting business, the company currently operates five free terrestrial television channels, including Feicui, J2, TVB, Pearl, and Wireless Finance and Sports Information Desk, with a total viewership market share of 80% (according to China BroadTV Sofry Media Research Data). After the restructuring, J2 Station and the Finance and Sports Information Desk will be merged into the new channel “TVB+”, and financial programs will be redistributed to Feicui TV and TVB+. After the redistribution and adjustment, the company's overall program production hours will be reduced. It is expected that 2024 will bring about HK$100 million in content cost savings and a reduction of more than 200 related employees. Also, in terms of e-commerce business, the company will merge the existing online platform “Shiduo” into another online platform “Neighbor Buy”, and related members and points will also be merged. It is expected that the annual fixed costs and operating expenses after the merger and restructuring will be reduced by HK$50 to 60 million and about 100 employees.

In the future, “Neighbor Buy” will introduce a more diversified product portfolio and be more closely integrated with mainland subsidiaries to provide more Hong Kong products and services to mainland consumers through live e-commerce projects in the Mainland to better enhance the overall GMV.

Risk warning: The recovery of the local advertising business falls short of expectations; competition in the e-commerce live streaming industry intensifies; regulatory risks.

The translation is provided by third-party software.

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