Star TV, Chinese Firm Reportedly in Joint Venture

Star TV, the satellite channel owned by News Corp.’s Rupert Murdoch, has reportedly hammered out a joint-venture deal in China that will allow it to sell ads and collect subscriptions on a made-for-China pay TV channel.

Star TV and a Chinese private-sector company would each hold 45% of the new venture, according to the Financial Times, and state-run China Central Television (CCTV) would own the remaining 10%. The new company would control three channels designed specifically for the mainland market: two general entertainment channels and the Star TV sports channel already beamed into China.

Though Star TV’s chief, Gary Davey, says there is “nothing to announce,” the deal would represent a first for foreign broadcasting companies eager to get in the door to China. Current regulations prohibit non-Chinese from participating directly in the market, for commercial and censorship reasons, though Beijing has been allowing more program exchanges and carefully monitored distribution of Star TV to certain hotels and institutions.

But after years of carefully controlled foreign program imports, the government is cutting deals with broadcasters eager for a chance at China’s 30-million-strong cable TV audience.

Star may be the one to push the door open a crack wider. Davey says that “a trend of broader cooperation is emerging,” driven by CCTV’s entry into satellite TV for the first time. “CCTV is taking a more aggressive, market-driven approach to the broadcasting business,” he says.

Indeed, China’s TV czars had almost everything ready to launch a successful pay TV channel. They had delivery: A satellite would beam programming to a national cable network. They had demand: Shanghai sold out its entire stock of 13,500 decoders at more than $100 each in three days. And most important, they had a monopoly: All regional networks are required to carry the state-run channel. But they were missing one essential thing: programming.

*

The prospect of 57 channels--or, in China’s case, four state cable channels to begin with--and nothing to broadcast is creating opportunities for Star and other international TV programmers who have long been kept at bay by a government suspicious of foreign media.

The potential rewards for programmers are huge. The government predicts the number of cable customers will reach 100 million by the end of the century. Compare that with the 12 million subscribers in the biggest U.S. cable system, Tele-Communications Inc., and it’s easy to see why broadcasters and advertisers are lining up.

For Rupert Murdoch, who admits his Asian satellite channel is losing $100 million a year, China’s potential is enough to inspire an ideological about-face. The media magnate who incurred Beijing’s wrath by predicting that satellite TV would bring about the downfall of “totalitarian regimes everywhere,” is now trying to partner with the same “dictators” he threatened to topple.

His efforts to regain favor--including jettisoning BBC news from his regional satellite channel, selling off a Hong Kong newspaper after unhappy rumblings from Beijing, publishing a biography of Chinese leader Deng Xiaoping written by his daughter, and establishing an online joint venture with the Communist Party newspaper--seem finally to be paying off.

Star currently has five Chinese-language channels, which have limited viewership in China but are mostly targeted at the more lucrative and sophisticated Taiwan market. Davey says additional satellite transponders will allow Star to transmit separate channels for Taiwan and China. Star and its Chinese partners could tailor a channel for China’s audience, vetted and distributed by the government.

To have a channel in China is a dream for most major broadcasters. But for now, most big names in the business are starting with small program sales and swaps. Media conglomerates such as Time Warner Inc., networks such as Prime Sports and NBC, specialist programming providers such as Children’s Television Network, which is planning a Chinese-language version of “Sesame Street,” and Dow Jones & Co., which offers business programming, can all be seen in some form on Chinese screens.

*

Hotels were jammed in September at a cable TV convention in Chengdu in China’s central Sichuan province, with independent programmers hoping to sell local cable systems shows such as “Sirens,” about female cops, and “Baywatch.” But as with everything in China, there’s a trade-off: The government retains all control of distribution and content, and most of the profit.

International TV companies that have successfully cut deals with CCTV have found that the key to getting into China’s market is providing a way for China to get its own programming out. Encore Media Corp., a TCI affiliate based in Denver, inked a contract with CCTV to swap sports, children’s shows and dramas--as well as provide 52 movies--in exchange for advertising time on the Chinese channel. Encore will broadcast CCTV shows on its International Channel, and eventually on a planned 24-hour Chinese-language channel, while creating its own Chinese programming for CCTV.

“Seeing our programs will give the world a better understanding of China,” said Ma Yuanhe, an official of the Ministry of Radio, Film and Television in Beijing, which has helped broker the deals. “That will improve our future cooperation.”