MTV Networks Asia, the video music service owned jointly by Viacom of the US and PolyGram of the Netherlands, is in talks with prospective shareholders to raise additional capital.
The service, which went on air two years ago and operates three channels across Asia, is still making a loss after absorbing $100 million of capital provided by the two founder-shareholders. PolyGram, one of the worlds largest record companies and a subsidiary of Philips, the Dutch consumer electronics group, affirmed that MTV Asia required more capital and that negotiations were under way with potential investors.
The new shareholder is expected to be an Asian company. Hotel & Properties, the Singapore leisure group which owns the regional franchise for the Hard Rock Cafe, has been mentioned as a possible investor, as has Chaoren Phopkand, the Thai industrial group.
Since its debut in 1995, the current MTV Asia has faced fierce competition from local music channels in individual countries and from Channel [V], a rival pan-Asian service which is 50 per cent owned by Star TV, a subsidiary of Rupert Murdochs News Corporation. Channel [V] was launched in 1994, after Star TV stopped broadcasting the original MTV Asia, then wholly owned by Viacom, which is still MTVs parent company in Europe and North America.
Star TV subsequently sold a 50 per cent stake in MTV Asia to four of PolyGrams rival record companies: Japans Sony, Warner of the US, Germanys Bertelsmann and EMI of the UK. Meanwhile, PolyGram formed a joint venture with Viacom to relaunch MTV Asia in 1995. That service has struggled to break even in the face of stiff competition for advertising revenue from Channel [V], which is also still loss-making. MTV Asia reshuffled its senior management last autumn.
The search for a new shareholder in Asia comes as MTV is preparing to face stronger competition in other regions, notably Europe, where several consortia are planning to launch video music channels on digital television networks. The first of MTV Europes new competitors is expected to be Channel [V], which is scheduled to go on air in the UK later this year. The BBC, Virgin, Emap and Granada are also considering proposals to introduce UK video music channels. MTV Europe is nationalising its European service, notably by introducing a dedicated UK channel this summer.
