News Corp integrates further into China
August 10, 2010

As China strengthens her influence on the global media industry, Rupert Murdoch, Australian Media Mogul and star Tv head honcho is plotting yet another technique to cloak News Corp as Chinese, thereby gain permission to beam news and entertainment across the middle Kingdom to 1.3 billion Chinese eyeballs.

This time round though, Murdoch has decided to sell News Corp’s stake in Xing Kong, Xing Kong International and Channel [V] Mainland China, along with its Fortune Star Chinese movie library, to China Media Capital a five billion yuan (US$739 million) investment fund set up in 2009 to invest in the Chinese media industry. CMC is backed by the state-owned Shanghai Media Group and China Development Bank.

Under the deal, CMC and News Corp will set up a joint venture that will be headquartered in Beijing and have offices in Hong Kong, Shanghai, Guangzhou in the south and Chongqing in the southwest. Jack Gao, vice president of News Corp and chief executive of Star China, will run the new company, effectively cloaking News Corp as a Chinese company.

According to a person with knowledge of the deal, the majority stake in the three TV properties and the movie library was valued at close to US$150 million, an easy way and tiny amount for the News Corporation, which has annual revenue of about US$32 billion to disguise itself as Chinese.

The agreement which seeks to build on News Corps value over the years, hopes to be able to be beamed to the common chinese man, a feat which millions of dollars in investments, guanxi building, official dinners and a Chinese wife yet haven’t managed to get Murdoch. The agreement also comes at a time when China is beefing up her own media industry. Beijing recently launched a 24 hour English news Channel in association with Xinhua, the state media channel.

News Corp has faced government restrictions in China since the past decade as private ownership of satellites dishes is prohibited except through special approval for hotels and government and foreign institutions. Foreign satellite channels can be distributed only in hotels that are three stars and higher and other approved organizations

While this is not Murdoch’s first attempt at disguising News Corp as Chinese, this might be his last. Tired and frayed with Chinese media regulations that will not allow a foreign entity in any form to beam information to their masses, Murdoch has been siphoning off his businesses in the mainland. In 2006, for instance, the company sold a 19.9 percent share in Phoenix Satellite TV to China Mobile, the state-owned telecom giant, significantly reducing Star TV’s stake in the venture. News Corp has also increasingly been investing in India, a market of 1.1 billion eyeballs and counting.


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