Murdoch: Rupert Murdoch's News Corp has spent the best part of two decades trying to establish a TV business in China. So its decision to sell control of three Chinese channels looks like a retreat. But the media mogul is not ending his love-hate relationship with Beijing just yet. Teaming up with a powerful local partner may finally help beam News Corp's Star TV into Chinese homes. Meanwhile, Murdoch can focus on more promising ventures.
Seventeen years after he bought Star TV, Murdoch has failed to secure a big Chinese audience for the channels. Satellite dishes are banned in China. Meanwhile, Star is losing traction among its targeted audience as youngsters swap TV screens for computers. The sale is also in stark contrast with News Corp's recent bid to take full control of BSkyB, its UK satellite arm.
However, offloading the Chinese channels may help Star on two fronts. First, a Chinese-owned controlling shareholder may be able to negotiate better distribution for the channels. The buyer, China Media Capital, is backed by Shanghai Media Group (SMG), China's No.2 media company. SMG's cable TV network reaches 17 million people in Shanghai.
Second, SMG can provide Star with original Chinese content.
China used to be just an importer of foreign movies and TV programmes. Now it is exporting entertainment. Beijing has reportedly earmarked $6.6 billion to extend its domestic media’s global reach. China Media Corp. is part of that effort. By keeping a minority stake, Murdoch can benefit as Star grows.
Meanwhile, News Corp has other, more promising ventures in China, including the Chinese version of WSJ.com and its MySpace China social networking site. It also owns 18 percent of Hong Kong-based satellite broadcaster Phoenix, which has much better reach in China than Star.
Murdoch got into trouble in 2005 when he complained that News Corp had hit a brick wall in China. If anything, that wall has grown since. By teaming up with insiders, Murdoch may stand a better chance of getting behind it.
