Apple Daily Is Running Low on Funds to Print Hong Kong Newspaper

Hong Kong’s pro-democracy Apple Daily newspaper has enough cash on hand to continue operating as normal only for a couple of weeks, according to a person familiar, after authorities used a sweeping national security law to freeze company assets and arrest top editors and executives.

To continue print operations and pay staff, the quarter-century-old tabloid is planning on seeking relief through the courts and is also looking to use its Taiwan operation to manage digital donations through GoFundMe.com and PayPal, said the person, who asked not to be named due to the sensitivity of a police investigation into the company.

Apple Daily Is Running Low on Funds to Print Hong Kong Newspaper

Executives are now examining the practicalities of keeping the newspaper running, including checking supplies of ink and paper in its warehouse, the person said. It’s unclear how the newspaper can pay staff and even whether regular suppliers and vendors will continue doing business with it, the person added, after local news outlet HK01 reported that authorities warned more than a half dozen banks not to deal with the company’s bank accounts.

The HK$18 million ($2.3 million) in Apple Daily assets frozen by police are only a small part of parent company Next Digital Ltd.’s HK$521.4 million in cash as of end-March, according to an exchange filing. But, the person said, it’s uncertain if the newspaper can access that cash given the various court orders and warnings to financial institutions to avoid handling accounts linked to alleged national security violations.

Apple Daily Is Running Low on Funds to Print Hong Kong Newspaper

Apple Daily reported over the weekend that the board of Next Digital plans to ask the city’s Security Bureau on Monday for the release of some frozen assets so it can pay the wages of its employees by the end of the month.

If Apple Daily’s print newspaper operation is shut down, the media outlet could continue publishing digitally from Taiwan while potentially paying journalist salaries via crowdfunding, the person said. Police have charged companies connected to Apple Daily, including Apple Daily Printing Ltd., with the same national security crimes as the individuals arrested this week.

Apple Daily Is Running Low on Funds to Print Hong Kong Newspaper

Some staffers are concerned about getting paid and planning to leave for other jobs after the raid on Thursday, according to three reporters who asked not to be identified. They are also worried that companies or media outlets won’t hire anyone who worked at Apple Daily.

Representatives from Apple Daily and Next Digital didn’t immediately reply to a request for comment.

Roughly 500 police officers on Thursday descended on the headquarters of Apple Daily, which is owned by the now-jailed democracy activist and Next Digital founder Jimmy Lai. Police searched the company’s offices, barred journalists from their desks and eventually carted away nearly 40 computers belonging to journalists, the paper said.

Apple Daily Is Running Low on Funds to Print Hong Kong Newspaper

Bail Denied

A Hong Kong court on Saturday denied bail to Editor-in-Chief Ryan Law, and Cheung Kim-hung, the newspaper’s publisher and chief executive officer of Next Digital. The others arrested included Chief Operating Officer Royston Chow and Apple Daily deputy editors, Chan Pui-man and Cheung Chi-wai.

The city’s Security Bureau had earlier frozen some of Lai’s assets and sent letters to some of his bankers, threatening them with years in jail if they deal with any of his accounts in Hong Kong.

Apple Daily Is Running Low on Funds to Print Hong Kong Newspaper

“The government always has ways to freeze all of its assets, and that will cause a lot of problems for paying salaries and cash flows,” said Ka-chung Law, an Apple Daily columnist who was previously the chief economist and strategist at the Bank of Communications Hong Kong. “Companies which do business with Next Digital may also ask for payments immediately.”

Police said Apple Daily published articles that violate the security law but they haven’t disclosed details about the articles in question, prompting confusion about what would amount to illegal journalism. It was the first time the national security law -- which bars subversion, secession, terrorism and foreign collusion -- was used to arrest journalists, though Hong Kong Secretary for Security John Lee said they were not targeting “normal journalistic work.”

‘Pay a Hefty Price’

Still, with authorities investigating Apple Daily and warning others to stay away from the paper, it wasn’t clear how long it could survive. Lee warned Hong Kongers to distance themselves from the suspects or “you will pay a hefty price,” and the Communist Party-backed Global Times newspaper ran an article late Thursday speculating that a total shutdown of Apple Daily can’t be ruled out.

“Convenience store managers and operators should seriously consider whether they should still shelve the paper for sale -- they should seriously seek legal advice on that point,” said Lawrence Ma, barrister and chairman of the Hong Kong Legal Exchange Foundation who’s also a provincial representative of the Chinese government’s political advisory body. “They might potentially be exposing themselves to liability for potentially being accomplices to aiding and abetting an offense.”

Apple Daily Is Running Low on Funds to Print Hong Kong Newspaper

The Apple Daily arrests generated criticism from the U.S. and Japan, as well as human-rights groups and press-freedom advocates. The move marked an escalation by China, which warned journalists that press freedom wasn’t a “shield” and that their “professional status” wouldn’t protect them if they violated the national security law.

‘Bottomless Assault’

Human Rights Watch called the Apple Daily arrests “a new low in a bottomless assault on press freedom,” while Amnesty International said “Hong Kong authorities are ramping up their crackdown on press freedom and using the pretext of ‘national security’ to justify it.”

In a statement, the Foreign Correspondents’ Club, Hong Kong, also said it was “concerned that this latest action will serve to intimidate independent media in Hong Kong and will cast a chill over the free press,” which is guaranteed under the city’s mini-constitution, the Basic Law.

China’s Foreign Ministry office in Hong Kong hit back, saying “external forces” had “distorted the truth, smearing Hong Kong’s press freedom and even spreading rumor about so-called ‘chilling effects.’”

“But it has only laid bare their ulterior motive to disrupt the rule of law in Hong Kong on the pretext of press freedom, in a bid to obstruct the HKSAR Government’s law-based governance and undermine Hong Kong’s prosperity and stability,” it said. “Such attempts are doomed to fail.”

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.