HONG KONG • Hong Kong property-to-media conglomerate Wharf (Holdings) is halting funding to its loss-making pay TV and broadband Internet subsidiary i-Cable Communications and will examine all options, including shutting it down, after failing to sell it.
Wharf's announcement, made after market hours on Thursday, sent i-Cable shares down as much as 46 per cent yesterday morning, before erasing some of the losses to be down 35 per cent at midday.
It was i-Cable's biggest intra-day fall on record. Meanwhile, shares of parent company Wharf jumped as much as 10 per cent.
Wharf said it would not provide further financing to i-Cable on expiry of current commitments of up to HK$400 million (S$73 million), and has no intention to increase its close to 74 per cent stake in the firm. Last year, i-Cable posted its ninth straight year of loss.
"The chances to see it turning into a profit-making business are low in the short to medium run," said Wharf chairman Stephen Ng at a results conference late on Thursday.
Wharf is a unit of Hong Kong developer Wheelock and Company.
Following previous reports that Wharf had tried to spin off the business, it said it had not entered into any agreements with potential buyers, and had now terminated all discussions regarding the sale of i-Cable. Mr Ng, who is also chairman of i-Cable, said external advisers would be engaged to explore alternative sources of funding for i-Cable, advise on its business reorganisation, as well as continuance, directions and discontinuance of its business operations.
With a current market value of about US$158 million (S$224 million), i-Cable saw its net loss widen to HK$313 million last year, from a HK$233 million loss in the previous year. Revenue from TV fell 8 per cent, while Internet and multimedia revenue went down 4 per cent. Wharf saw its core profit last year rise by 25 per cent.
TV subsidiary i-Cable has been a popular pay-TV service provider in the city of 7.3 million since 1993, providing a mix of local and international news, sports and entertainment channels, including some of its own original content. It also runs a respected news service, Cable News, that has a reputation for quality and independent journalism.
However, Hong Kong media operators have been struggling in recent years. Both Television Broadcasts and Asia Television have attracted a number of bidders, but the latter shut down last year.
The pay-TV licence for i-Cable will expire in May 2017, and the firm said the government has agreed to grant a new licence for 12 years.