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As a man who made his name in the business of television broadcasting, reports that Richard Li, son of Li Ka-shing, Hong Kong’s richest man, is considering buying a newspaper – the Hong Kong Economic Journal (HKEJ) – are hardly surprising.
Mr Li has long said he wanted a local partner in the media to provide content for his company PCCW, Hong Kong’s largest telephone operator.
But his plans to pay between HK$200m (US$26m) and HK$250m to buy the HKEJ, as reported in the Hong Kong media over the past week, have puzzled analysts.
One of the territory’s smallest albeit most reputable financial dailies, the paper would seem to provide few commercial synergies for PCCW because the
company could more easily and cheaply buy content from newspapers directly.
The move, however, underlines Mr Li’s long-standing interest in the media, an industry in which his family has some holdings but not the dominance it enjoys in many other aspects of Hong Kong’s economy.
PCCW said any acquisition would be carried out by Mr Li himself, rather than the company, which declined to comment further.
“It’s difficult to work out the strategy,” says Ramiz Chelat, analyst at Macquarie Research in Hong Kong.
“Hong Kong is a very competitive market in publishing.
“And it’s a difficult business case to buy a newspaper unless you plan on consolidating other newspapers.”
Mr Li’s most famous deal has been his US$28bn takeover of Cable & Wireless HKT, Hong Kong’s dominant fixed-line operator, six years ago.
But it was the sale of Star TV, a satellite TV operation, to Rupert Murdoch in 1993 that gave him the capital to start Pacific Century Group, the company that bought the telecoms company.
After the sale of Star, Mr Li returned to broadcasting with the takeover of HKT, which had an interactive pay-TV service, iTV. Operations closed in 2002 but PCCW launched Now TV, a broadband TV network, a year later.
“All along we thought Now was something PCCW was doing to stimulate
its core telecoms and broadband businesses,” says one analyst.
“Maybe we are wrong. Maybe media is really Richard’s thing.”
The elder Mr Li, through his flagship companies Hutchison Whampoa and Cheung Kong, owns Metro Broadcast, a radio station. He also controls Tom Group, a media and publishing company whose businesses include more than 60 magazine titles in Hong Kong, Taiwan and China as well as an entertainment channel in partnership with Time Warner on the mainland.
Analysts expect the younger Mr Li to use the HKEJ – which has an estimated circulation of only about 40,000 readers, or half that of the rival Hong Kong Economic Times – as a vehicle to further expand his media business.
Although the potential purchase may require government approval under cross-media ownership rules, analysts said this should not be difficult.
According to Hong Kong’s broadcasting ordinance, PCCW is not allowed to own other media as the company already owns Now.
As the biggest shareholder of PCCW, Mr Li also needs official consent to buy a newspaper.
If he wins such consent, the Li family will have presence in almost all forms of media in the territory.