TVB shares fall on worries over Shaw sale

Shares in Television Broadcasts (SEHK: 0511) saw their biggest drop in 17 months yesterday as investors digested news that 102-year-old Sir Run Run Shaw would sell his stake in the broadcaster he co-founded more than 40 years ago. Shares in the city's biggest free-to-air broadcaster dived as much as 11.8 per cent before closing with a loss of 5.8 per cent at HK$43.80 on concern about the company's future after Shaw. The stock surged 16.8 per cent before its suspension on Monday on speculationHenderson Land Development (SEHK: 0012)vice-chairman Peter Lee Ka-kit, the elder son of billionaire founder Lee Shau-kee, was planning to buy the stake. Shanghai Media Group (SMG), the mainland's second-largest media company, is also reportedly eyeing the broadcaster, partly because of TVB's lucrative production of Chinese television programmes. The broadcaster has confirmed that Shaw Holdings, owned by the family of Shaw, is in talks regarding a possible sale of shares. Peter Lee had earlier confirmed he was studying a plan to buy a stake in TVB. TVB, one of the world's biggest distributors of Chinese-language television programmes, has operations in more than 30 countries. Its Taiwan branch, TVBS, saw revenue of HK$347 million in the first half of this year, an increase of 16 per cent from a year earlier. For SMG, acquiring a controlling stake in TVB would give it access to the Taiwan market. Following the signing of the economic co-operation framework agreement between Taiwan and the mainland, there has been speculation the mainland will attempt to acquire media companies on the island. Shaw gave up his executive duties last year to become the non-executive chairman. He is the biggest shareholder in TVB with a 32.5 per cent stake, comprising shares held personally and the 26 per cent holding owned by Shaw Brothers (Hong Kong). Two years ago, Lee Shau-kee offered HK$3 billion to support Yeung Kwok-keung, the chairman of Country Garden Holdings, in an acquisition of Shaw Brothers. The plan was scuttled by the global financial crisis. Lee said to the press then: "Shaw will sell the stake in TVB sooner or later. That's for sure." Peter Lee might pay up to HK$9.2 billion to acquire the 26 per cent shareholding of Shaw Brothers, according to reports. SMG is said to have made an offer of up to HK$10 billion to TVB managing director and wife of Shaw, Mona Fong Yat-wah, who is in charge of the broadcaster's day-to-day operations. Rita Lau Ng Wai-lan, the secretary for commerce and economic development, said under the regulations, any transfer of shares should be submitted to the Broadcasting Authority within 14 days. Earlier this year, the government lifted the ban on the number of free television programme service licences. There are now only two free-to-air broadcasters in the city, TVB and Asia Television.