The Standard newspaper in Hong Kong has reported that local terrestrial broadcaster, Asia Television is to sell a 22.2 percent stake to Mainland cable-TV operator, CITIC Guoan.
A state-owned enterprise, CITIC Guoan will help ATV sell television content and generate additional advertising sales in the mainland, ATV chief executive Chan Wing-kee said.
"CITIC Guoan's extensive interests in cable TV networks in the mainland will prove to be a tremendous asset to ATV as it expands in the mainland," Chan said Friday.
CITIC Guoan has interests in 21 cable TV networks in seven mainland provinces, with a combined nine million subscribers, ATV said.
Total company assets, valued at 18 billion yuan (HK$17.43 billion) at the end of last year, also include interests in telecommunications, satellite and travel industry-related property.
Half of CITIC Guoan's stake will be in the form of new shares, while the rest are existing shares held by Chan. He did not disclose the transaction size.
Following the transaction, Chan and Phoenix Satellite Television chairman Liu Changle will together retain control over 70 percent of ATV's shares.
The proposed deal will be subject to approval from the Broadcasting Authority, Chan said.
"CITIC Guoan will not interfere with the production of ATV news and other types of programming," Chan said. "The deal will comply with Hong Kong's broadcasting regulations."
By increasing the potential for greater future revenues from the mainland, the deal will aid ATV's bid to list in Hong Kong.
Market observers said past attempts by ATV to sell shares were delayed by former stock exchange rules requiring main board listing candidates to be profitable for at least three years.
ATV, which gained landing rights to broadcast in Guangdong province in 2002, has failed to derive significant income from the arrangement to supplement revenues from its operations in Hong Kong, where it ranks a distant second to Television Broadcasts.
CITIC Group, the investment arm of China's State Council, is the parent of Hong Kong-listed CITIC Pacific and CITIC International Financial, operator of local lender CITIC Ka Wah Bank.