Just as PCCW's media business is gaining traction around Asia, the operator has become embroiled in a censorship controversy at home.
The telco and media company was in the headlines this week after cancelling a popular reality TV show because participants had raised the toxic issue of Hong Kong independence.
PCCW Ltd. (NYSE: PCW; Hong Kong: 0008) claimed the two political activists starring in the show, Hong Kong "localist" Billy Fung and Taiwan-based historian Wang Dan, had talked about independence at an "improper" press conference at the Japan Foreign Correspondents' Club in Tokyo.
The two rejected the company's version of events. Wang Dan posted a copy of the show travel itinerary online to indicate the press conference had been agreed upon in advance.
The show, Travel with Rivals, is based on the idea of putting two political rivals on the road together, and was one of the most popular programs on PCCW's OTT service ViuTV.
The incident followed another one this year in which PCCW encountered protests after its Moov music service appeared to offer a job to a pro-democracy pop star, Denise Ho.
The controversies underline the difficulties of operating a media business today in Hong Kong's once freewheeling environment, where Beijing's influence is strongly felt.
PCCW executives could not be reached for comment. One analyst told Light Reading that PCCW may have felt obliged to cut the program because it would put Viu in breach of its TV license.
Additionally, the company would need to act in order to preserve relations with Beijing, even though -- ironically -- its media and telecom businesses are almost wholly excluded from the China market.
In that light, its decision to focus its media arm on southeast Asia, India and the Middle East is looking increasingly smart. The business is starting to return good numbers. ViuTV, launched just a year ago, is now in 17 countries and has 2.8 million monthly active users. (See When a Telco Goes OTT.)
Its music brand, Moov, has just set up in Vietnam, its first external market. It signed up 150 local labels to create a domestic playlist and struck a partnership with operator Vietnamobile in which revenue is shared but Moov owns the billing relationship.
PCCW's media properties -- Viu, Moov and pay-TV brand NOW -- accounted for more than 10% of total revenue in the first half of the year.
The biggest part came from NOW, Hong Kong's largest pay-TV provider, which generated $178 million in revenues. Its 13% EBITDA margin is well short of the 36% margin delivered by the telecom arm. But given the demand for mobile content in emerging markets, PCCW looks to have found a growth path.
— Robert Clark, contributing editor, special to Light Reading