BEIJING, Mar. 4 -- Hong Kong's major pay TV operator I-Cable Communications will embark on making five to six movies this year, part of its HK$300 million (US$38.5 million) film production plan as it tries to stay ahead of its rivals with better entertainment content.

    One movie is expected to be released this year, the company said yesterday when announcing its net profit jumped 29 per cent to HK$284 million (US$36.4 million) in 2004.

    I-Cable said earlier that it would produce up to 20 full-length feature films within three years in collaboration with local film production houses.

    EDKO Film, producer and distributor of internationally acclaimed movie "Crouching Tiger Hidden Dragon", will be the first partner in this new business.

    Stephen Ng, chairman and chief executive officer of i-Cable, said the move is a logical and significant step to replenish TV content.

    Operating three movie channels, the company has strong appetite for local films. "The supply shortage of local films pushes up the purchase cost," Ng said. "And the fierce competition in the pay-television market requires us to increase our content edge."

    Once dominant in the industry, the company now has to fend off rivals like PCCW's Now TV and TVB's newly launched ex-TV.

    The company plans to invest HK$10 million (US$1.28 million) in each big-scale film production for the international market and HK$2-3 million (US$256,400-384,600) each for the local screen.

    "The film production projects can create synergies with our pay-TV movie and entertainment platform," Ng said.

    He stressed the company is in a healthy financial state to fund the new investment, as continued growth in pay TV subscribers and turnover offsets the impact of rising programming costs.

    The company, which also runs a broadband business, reported its net cash increased to HK$115 million (US$14.7 million) at the year ended December from HK$29 million (US$3.7 million) in 2003.

    Operating expenses recorded a 10 per cent rise to HK$2.076 billion (US$266 million) due to higher programming costs.

    However, the company said its capital expenditure (capex), which amounted to HK$428 million (US$54.9 million) last year, was already at a peak and will decline for the following years.

    For the full year of 2004, the company increased its customer base by 47 per cent to 702,000 subscribers with average revenue per user (ARPU) up to HK$225 (US$28.8) from HK$220 (US$28.2).

    I-Cable also saw its broadband customers rise to 291,000 with ARPU up 11 per cent to HK$140 (US$17.9) last year, but the business remained in the red with an operating loss of HK$44 million (US$5.6 million).

    The broadband phone service, provided by i-Cable's sister firm Wharf New T&T, has signed up 29,000 customers since its launch in October last year.

    Ng said the company will keep reviewing its "triple-play" offer, which bundles broadband, voice-service and mini-pay TV in one package in responding to the intensifying competition landscape.

    "The severe competition for the year to come will continue to be difficult, especially in pay TV and broadband service," Ng said.

    
(Source: China Daily HK Edition/Sammy Chan)