VietNamNet Bridge - Many joint ventures with foreign partners become wholly foreign owned businesses after long periods of taking losses. This could occur with K+, a joint venture between Vietnam Television (VTV) and French Canal Plus.



{keywords}

In K+, Canal Plus acts as the investor, the provider of the British Premier League broadcasting rights, the creditor and the guarantor for K+’s borrowings. The four important roles taken by the French partner give it major power. 

Therefore, analysts have every reason to fear that VTV’s assets in the joint venture will fall into the hands of the French business one day.

In June 2013, the Ministry of Planning and Investment asked VTV, the Vietnamese partner, to work with K+ to provide solutions to improve the bad business performance.

At that time, K+ reported a gross loss of VND1.3 trillion, or $65 million by the end of 2012, while the stockholder equity was minus VND955 billion.

However, K+ seemed to ignore the warning. It spent $40 million on the rights to broadcast the British Premier League for three years. The sum of money accounted for 74 percent of the total investment capital ($54 million), double the chartered capital ($20.1 million) and equal to 61 percent of the gross loss.

Why did K+, which incurred heavy debts, still continue to spend so much money instead of practicing thrift to stop loss?

Analysts commented that taking a loss is a long-term business strategy followed by the French investor.

They recalled many cases, in which joint ventures repeatedly took losses and eventually fell into the hands of foreign investors, because the Vietnamese partners had no other choice than selling their capital contribution to foreign partners to recover the investment capital. The same scenario may happen with K+.

Lawyer Tran Viet Hung from Cong Ly Ha Noi Law Office noted that Canal Plus said that by cooperating with Canal Plus, VTV has “brought home a snake and let the snake bite its own chickens”.

VTV, as national television, was assigned by the government to conduct negotiations for the right to broadcast the British Premier League, dislodging VTC and FPT, which also wanted the rights, from the game. 

After getting the broadcasting rights, VTV transferred the right to K+. The other television stations, which wanted to broadcast the premier league, then had no other choice than pay money to K+. 

It is unclear how VTV profited when giving K+ such a great advantage, but it is highly possible that it would lose its assets to the French business.

Pham Huyen