FRIDAY, DECEMBER 20, 2002
News Corp's Star TV enters China with JV
REUTERS
SHANGHAI: Rupert Murdoch's News Corp is poised to expand its tiny footprint in China by forging the first strategic partnership between a foreign company and a domestic broadcaster, company executives said on Friday.
News Corp's Star Group signed a pact with Hunan Broadcasting Group on Thursday to co-produce and broadcast television programmes for the world's largest audience and fastest growing -- though insular -- media market.
"It's pretty much an ideal advertising market for TV, for media," said Jannie Poon, Star's vice-president of corporate affairs in Hong Kong.
"All the focus is there (in China) and you have a lot of new brands introduced in the market, so of course you have to spend advertising dollars heavily on TV to reach the homes."
Billed by state newspapers and company officials as the first pact of its kind, the deal could eventually see Star TV expand its viewership into its partner's territory in central China.
But executives said the pact was more of a framework for future cooperation, and thus short on details.
Australia-based News Corp has long coveted China's media market, expected to boom alongside steadily rising incomes.
It is now confined to broadcasting Star's Xingkong Weishi Mandarin-language channel via cable into Guangdong province in the south, the country's test-bed for foreign programming.
Beijing is reluctant to relinquish control over an industry often seen as the government mouthpiece and foreign TV channels are now mostly limited to luxury hotels, foreign residences and special venues approved by the state.
Like rivals AOL Time Warner and partly owned Phoenix Satellite TV, News Corp is urging China to relax its grip on the sensitive sector, which industry experts say could see 36 per cent growth in ad-spending to $760 million by 2004.
News Corp's shares fell 0.91 per cent to A$11.92 on Friday.
Eye on ad revenue
Most foreign media giants are likely to remain limited to supplying programmes in the near term, though a number have won approval to tap much more lucrative advertising revenue.
"Global or international media will obtain a relatively small but nonetheless significant slice of the total media pie through reciprocal partnerships and agreements," said Media Partners Asia analyst Vivek Couto.
Star, easily Asia's most aggressive media investor, now makes more than half its profit from India but China is seen as a key area for future growth, analysts said. The company has used local programming to drive earnings growth, they said.
News Corp has said it plans to sink well over $100 million into Star's lone TV channel in China, packed with game shows, sitcoms and dances, over the next three or four years.
Star also sells syndicated programmes across the country, such as its mainland-produced Women in Control programme, a Survivor-like male beauty contest in which Shanghainese women eliminate contestants by dunking them in cold water.
The Hunan Broadcasting Group, controlled by the Hunan provincial government, is the parent of Hunan TV & Broadcast Intermediary Industry, which lists domestic A shares for Chinese and select foreign investors in Shenzhen.
The listed firm's A shares rose 0.28 per cent to 14.19 yuan.
"News Corp will win more Chinese audiences with our help," a Hunan TV official said. "Right now, all we agreed is that jointly produced programmes will be broadcast on both our networks."
Two other foreign-owned media also secured permission in 2001 to air into Chinese households, touted at the time as a symbol of China's willingness to prise open the restricted sector.
AOL Time Warner operates a Hong Kong-based CETV channel that broadcasts into Guangdong province, and Phoenix Satellite TV -- in which News Corp also owns 38 per cent -- also maintains a popular Mandarin-language channel there.
But Star acknowledged that foreign media may have to eschew short-term gains.
Poon said Star had not got any hint from regulators they would be allowed to expand beyond Guangdong soon.
"We are in for the long haul. We understand that it usually takes some time," Poon said.
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