THE Pacific : Wiring Hong Kong With a Bit of L.A. : Former UCLA Student Waits to See If He’ll Run What Could Be World’s Largest Cable System

Ask Craig E. Ehrlich how he ended up as managing director of what could become the largest media company in Hong Kong and he’ll tell you about the experimental Asian studies program that he was in at Hamilton High School in West Los Angeles.

“From the time I was a teen-ager, I’ve been influenced by Asian culture and been around Asians,” says the 34-year-old Ehrlich. “My best friends were Asian, my favorite teacher in high school, Mr. Kiriyama, was Asian. At UCLA, there were lots of Asians. Here (in Hong Kong), I don’t feel like I’m in a strange place--it was a natural evolution.”

Sliding easily from one Pacific Rim capital to another, Ehrlich has clearly benefited from cultural cross-fertilization. Hutchison Cablevision hired him away from Los Angeles-based Falcon Cable TV two years ago partly on the basis of exposure to Asian culture.

“The guy who first recommended me for the job knew me and knew I had an interest in Asia, and they (Hutchison) liked that in a gweilo, “ he says, using the Hong Kong slang for “white devil,” or Caucasian. “Having a gweilo come in and run what could become the largest media company in Hong Kong, they had to be sure I could understand the market.”

Politics Are Difficult

Ehrlich will soon find out if he’ll get the chance to show his talents. Hutchison Cablevision, a subsidiary of billionaire Li Ka-shing’s Hutchison Wampoa conglomerate, is bidding for the right to install a $550-million cable system in Hong Kong that would be the largest in the world. The government is expected to announce its decision as early as Tuesday.

“If Hutchison were to lose, obviously, I would have to make a decision on what to do with my life,” Ehrlich observed. “I’m very pleased with what we have done--our team has delivered--but the politics are difficult because I’m not an insider in Hong Kong.”

Although four groups had originally bid for the franchise, only two are still in the running: Hutchison and its minority partners (British Telecom, Hong Kong & Shanghai Bank, Swire Pacific and CIDIC, the mainland government’s investment arm) and a group led by shipping tycoon Y. K. Pao’s Wharf Holdings and including the American regional telephone company US West.

The stakes are high: rights to a television cable system that will initially have 1.8 million potential subscribers and will also offer lucrative telephone services in the booming colony.

Ehrlich said Hutchison’s bid was 2,500 pages long and cost $3 million to $4 million to prepare, but the decision, as is so often the case in the cable-television business, will come down to politics.

“We were ranked No. 1 by the independent consultant, but they have a strange process where they are now negotiating with both parties, so even at the last minute it’s anybody’s ballgame,” Ehrlich said with a touch of weariness. “If Mr. Li decides that this is the kind of investment he wants to make right now, then we will win. If not, the other guys will win.”

Li’s desire to embark on such a project now, Ehrlich said, may be influenced by the bloody crackdown on the Beijing student movement. Hong Kong reverts to Chinese sovereignty in 1997, and despite promises that the capitalist system will be maintained, many residents and investors are nervous.

The uncertainties that loom for Ehrlich are not quite what he anticipated when he left Falcon Cable TV to come to Hutchison in the fall of 1987. At Falcon, which he joined after completing a masters degree in urban studies at UCLA and working as a Coro Foundation intern, he had worked closely with Chairman Marc Nathanson in building the firm from a tiny 20,000-subscriber company into a multiple-system operation with 600,000 customers. He spent a good deal of time running franchise bids, and he was tired of it.

Wasn’t Interested

“I told (Hutchison) that if they wanted someone to run the licensing, I wasn’t interested,” Ehrlich recalls. “But they expected to have the license within four months, they were very confident, and I assessed it and felt their chances were excellent.”

But after Ehrlich arrived, the government changed its mind about how to proceed with the licensing. Ehrlich found himself, once again, heading a franchise bid.

Ehrlich said his decision to make the dramatic move to Hong Kong shocked many of his friends and associates. But Nathanson, his old boss, was not surprised: “He wanted new worlds to conquer, and it was time for him to do something on his own.” Ehrlich confirmed that he eventually got weary of the mentor-prodigy relationship.

Now, without a doubt, Ehrlich has his own challenge. If Hutchison wins, the company will embark on the installation of the system and the massive task of producing programming for the 38 channels. While cable systems in the United States can tap into the large number of satellite channels that are beamed down across the country, the Hong Kong cable system will have no such luxury.

“Broadcasting here is 20 years behind the times, and this will be a very exciting programming venture,” Ehrlich said. He said about 60% of the programming will be locally originated and will draw heavily on the U.S. experience, with offerings such as a music channel, a 24-hour news channel and a children’s channel.