AOL cracks China

China, conglom seal landmark cable deal

As U.S. media congloms court China, AOL Time Warner and News Corp.-owned Star TV got a big leg up last week when their channels were granted cable carriage rights in mainland China.

Phoenix Satellite Television, part-owned by News Corp.-owned Star TV and AOL Time Warner’s CETV Mandarin-lingo channels will become the first foreign-owned nets with these rights.

“Star is very pleased about this development,” said chairman and CEO James Murdoch in a statement.

AOL TW’s 24-hour information and entertainment net, available on satellite only, will be distributed to cable subs in the Southern region of the People’s Republic of China starting in January — with official consent.

Phoenix and Star, along with terrestrial channels like Hong Kong’s ATV and TVB, already broadcast into vast areas of China, while most Chinese receive Western channels only illegally via satellite.

AOL Time Warner said the deal is unusual in its reciprocity, calling for CCTV-9, the English-language service of national broadcaster China Central Television, to be carried on select Time Warner Cable systems in the U.S.

The agreement, in the works for months, came on heels of a much-heralded meeting of APEC, the Asia-Pacific Economic Cooperation Forum, in China — the first face-to-face meeting between President Bush and Chinese President Jiang Zemin. A host of industry players, including AOL Time Warner CEO Gerald Levin, also attended, as U.S. companies look for inroads into the giant Chinese market.

Financial terms weren’t announced, but U.S. media execs clearly see a lucrative payday down the line from China’s hundreds of million of TV viewers.

Attitude shift?

Politicos in China hope a channel Stateside will help shape more favorable U.S. attitudes toward that nation.

It is progress, but of a limited sort. At present, the 22 approved foreign channels — including CNN and CNBC –can only be officially broadcast to hotels and residential areas for foreigners.

And Liu Changle, Phoenix’s chairman, doesn’t think the decision heralds a massive influx of foreign players into the Chinese media market. “Only a couple more will be approved in the near term,” he says.

Last June, AOL inked a joint venture deal with Chinese computer and tech company Legend to develop interactive services.

The TV deal, signed by AOL Time Warner’s Asia Pacific unit and China Central Television, “is the first Sino-U.S. cooperative agreement signed after APEC,” says Xu Guang Chun, director of China’s State Administration of Radio, Film and Television. “It serves as a starting point toward developing further cooperation.”

CETV will be distributed via systems of Guangdong Cable TV Networks Co., the largest state-owned cable networks in southern China.

After AOL’s announcement, Liberty Media’s Intl. Channel Networks and Encore Intl. noted that ICN carries CCTV-4, another CCTV network, 24 hours a day through a tier of single foreign-language channels.