Rupe chips away at China

Certain hotels, foreign communities to see Starry Sky

HONG KONG — It seems global mogul Rupert Murdoch is leading a charge from the West onto China’s airwaves.

Murdoch-backed channels have won approval for a big expansion behind the Bamboo Curtain, bringing the media tycoon a step closer to achieving his ambition of broadcasting Chinese-lingo programs across the country.

News Corp.-owned Star is set to announce that it has permission to beam Mandarin-lingo entertainment channel Xingkong Weishi (Starry Sky) to hotels above three stars and into residential compounds where foreigners and overseas Chinese live, according to reports.

News Corp. has said it plans to invest well over $100 million in the channel during the next three to four years.

On Jan. 7 Phoenix Satellite, 38% owned by Star, won similar landing rights for its InfoNews Channel in China, making it the first foreign-owned Chinese-lingo, 24-hour news service to be allowed to broadcast there.

It was swiftly followed by U.S.-based, 24-hour business and financial news service Bloomberg Television, which has won similar rights.

Founded by New York Mayor Michael Bloomberg in 1994, Bloomberg Television is distributed on 10 nets worldwide in seven languages and already airs in Hong Kong.

Such deals are rare for dedicated news providers. Of the 28 foreign-owned channels authorized in China, only five (including CNN and Blighty’s BBC) are news-oriented and all are in languages other than Chinese.

Bloomberg’s focus on financial news is an advantage in China because the country is increasingly interested in business information as it opens its markets following its entry into the World Trade Organization. It also avoids sensitive political issues.

Analysts say Bloomberg must now localize its offering by creating a Mandarin-lingo feed.

AOL Time Warner is believed to be close to a similar deal for CETV, a Mandarin-lingo entertainment channel whose distribution is currently restricted to the southern Guangdong province.

Beyond the financial implications, the new licenses signal a liberalization of China’s tightly controlled news media landscape. “I think it’s a realization by the government that the Chinese community at large needs to be better informed about the outside world, both for economic and political reasons,” says Robert Uren, Phoenix’s VP of international affairs.

Murdoch must now hope InfoNews will finally turn a profit.

Until now, the 2-year-old Mandarin-lingo channel has had a limited audience in Hong Kong’s largely Cantonese-speaking cable households and satellite dish owners throughout Asia. Revenues have been scant.

“Currently it mostly carries advertising for other News Corp. channels,” says Uren.

With Chinese domestic travel on the increase, he foresees a potentially substantial viewership for InfoNews. “It means that we can develop an audience that will justify advertising on it,” Uren says.

Xingkong Weishi is restricted to Guangdong, where a local cable TV company pipes its satellite signals to about 1 million viewers. It will now be able to reach about 500,000 hotel rooms as well as foreign communities, including 250,000 Taiwanese living in and around Shanghai, China’s biggest city.

Phoenix runs two other channels in China, paybox Phoenix Movies Channel and the flagship Phoenix Chinese Channel, providing entertainment and information programming.

PCC’s news coverage of sensitive domestic issues has earned it a “pro-Beijing” label. But its international news is more balanced.

The channel’s big break came during the Sept. 11 terrorist attacks in the U.S., when Chinese people flocked to hotels to watch Phoenix’s news feeds from New York. “It shows how a news channel with some sort of objective content appeals to Chinese viewers,” says Vivek Couto, analyst for consulting firm Media Partners Asia.

Phoenix hopes that appeal is strong enough to turn around its ailing financial performance. The company has posted losses in the past seven quarters partly because of InfoNews. For the year ended June 2002, Phoenix reported a net loss of $25.6 million compared with a net profit of $6.9 million a year earlier.

CEO Liu Changle expects the company to break even by 2004. “A lot of people thought that was unrealistic,” says Couto. “But now maybe it’s not so unrealistic.”

The company expects that about 70% of InfoNews’ advertisers will be mainland Chinese companies, and the rest foreign firms.

The influence of Liu’s lobbying efforts should not be underestimated.

The former People’s Liberation Army general, who owns 38% of Phoenix as well as 46% of Hong Kong’s Asia Television, is politically well connected. “The CEO has driven it,” says Couto. “He got landing rights first for Phoenix, then for ATV and now for InfoNews. He’s quite an influential person.”

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