Invest in a company which has a durable competitive advantage, like a castle surrounded by a deep moat. Isn't that what the investment maestro Warren Buffet teaches us?
In the media and entertainment industry, the mighty TVB is such a company. No other company has threatened the pseudo-monopoly of TVB in viewership and TV advertising.
Examining the profit and loss account of TVB from 1990 to 2005, I am amazed at its excellent performance: sales increased from $1.5 billion to $4.17 billion, up 178 per cent, or at a compound growth of 7 per cent a year. Sales - mostly advertisement income supplemented by programme licence income - kept growing even in 1997 and 1998, the worst of the Asian crisis and the property crash. Operating profit rose from $375 million to $1.45 billion, up 289 per cent, or at a compound growth of 9.4 per cent a year. Net profit for shareholders rose from $327 million to $1.18 billion, up 261 per cent, or at a compound growth of 8.9 per cent a year.
In 2005 sales and profit both reached record highs. There was no substantial retreat in sales and profit during those 15 years.
Last year sales gained 9.4 per cent year on year to $4.17 billion, thanks to income growth of Hong Kong terrestrial television broadcasting, and more income from distributing TV channels in China, Taiwan, Hong Kong and elsewhere.
Advertisement income net of agency commissions was $2.68 billion, up 3.3 per cent year on year; programme licensing income was $791 million, up 3.1 per cent; subscriptions $414 million, up 12 per cent; sponsorship programme income was $337 million, up 191 per cent.