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HONG KONG MYSTERY

Media firms see handoff as an opportunity

HONG KONG – With the colony reverting to Chinese rule next July 1, American media companies that base their Asian operations here are betting heavily that the handover will be more of an opportunity than a liability.

And while no one is expecting drastic changes – at least in the short term – there’s also little doubt that the shift from British to Communist Chinese rule will sharply curtail Hong Kong’s freewheeling ways in the long term. Hong Kong is guaranteed its autonomy under the “one country, two systems” deal, but there is talk of demanding accreditation of journalists, limiting political discourse and ousting undesirables.

“We see 1997 as an opportunity as well as an uncertainty,” said S.K. Fung, president of Hong Kong-based NBC Asia. “We are not naive.”

CNN’s Hong Kong bureau chief Mike Chinoy, who spent eight years working in Beijing, said censorship, corruption and bureaucratic red tape are facts of life on the mainland.

“And the concern in Hong Kong is whether some of those less pleasant aspects will seep into Hong Kong.” Chinoy added, however, than “an awful lot will have to change for it to reach a point where it becomes impossible to operate here. We’re here for the long haul.”

Even with potential threats, industry officials’ concerns are clearly offset in the opportunity offered by the proximity of China’s 1.2 billion people.

Chau Tak-hay, Hong Kong’s secretary for broadcasting, reminded media execs in town for the recent meeting of the Cable and Satellite Broadcasters Assn. of Asia that Hong Kong is on China’s doorstep.

“Growing affluence and unsatisfied demand for television choice make China a mouthwatering market,” said Chau. “Estimates suggest that there are already 40 million pay TV subscribers, with the number set to climb to over 200 million by the turn of the century.”

Added Chau: “There is no doubt that entering the Chinese market is hard work. But you can’t afford to ignore one of the world’s largest and fastest-growing economies. And from next year, those of you based in Hong Kong won’t need to hover on China’s doorstep. You will have your foot in the door already.”

As if to prove the point, NBC Asia recently announced a deal with the Chinese national broadcaster to air CNBC business programming. “No doubt as China develops, demand will become more significant,” Fung said.

AMC’s vice president-Asia Rance Pow acknowledged that the movie theater chain is opening its first theater in Hong Kong at the end of next year, in part to show commitment to the China market. The Hong Kong location will serve as “a model of the quality and concept of what we would like to build in China.”

MGM/UA teamed with Encore Intl. to launch MGM Gold in Asia this month, from a base in Hong Kong. MGM/UA Telecommunications Group president Gary Marenzi ticked off three reasons why: “There’s a tremendous talent pool. It’s the hub of travel. There’s a great business climate.”

And, Marenzi added, being part of China could be an advantage when and if the government allows broadcasters, such as MGM Gold, to beam their signals into mainland homes.

Ganesh Basawapatna, president and COO of Encore, echoes the prevailing sentiment. “We see 1997 as an advantage rather than a disadvantage. In the long run, the place is going to be the leader for all of Asia. We have no qualms – none whatsoever. We’re very bullish.”

Turner Intl. is also sanguine about future prospects. It recently opened a Hong Kong bureau of CNN. In fact, secretary Chau expects thousands of broadcasters and journalists to come to cover the event.

Chinese officials have promised freedom of speech – as long as broadcasters don’t say anything bad about Chinese government officials, or advocate something like independence for Hong Kong.

NBC Asia is banking on the supposed neutrality of business-news coverage to keep its CNBC channel out of hot water. “There is a risk of censorship,” said Fung. “We can avoid it by being neutral and balanced in our reporting. We don’t editorialize; we report all views. Balanced reporting is our best security.”

Other services, like ESPN, are relying on the neutrality of sports to keep them out of any possible line of fire.

Local broadcasters, such as TVB, see the changeover as a leg-up on the competition. “The return of Chinese sovereignty to Hong Kong will reduce barriers and improve TVB’s access to these burgeoning new markets,” the company said in a statement.

To be sure, some American companies, such as the Discovery Channel, have already left their homes in Hong Kong for Singapore or, like HBO and MTV, based themselves in Singapore right from the start. But they would argue that they made their decisions based on purely financial reasons and not as political statements. Singapore aggressively recruits foreign companies looking for an Asian base.

But Fung believes that NBC, for one, weighed the pros and cons and made the right decision to go with Hong Kong. He acknowledged that a contraction in the financial market or a major political brouhaha could change everything.

In the meantime, he asked, “Will it all be negative? No, some things are likely to be negative and some positive.”

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