News

Eyeing Ever-Illusive China

1/03/1999 7:00 PM Eastern

China's potential as a pay TV market will get a
significant test this year, as HBO International seeks to launch a dedicated service to
the mainland and Star TV's Phoenix Channel movie channel builds on its base there.

Sources confirmed that HBO International senior vice
president William Fischer is actively pursuing a plan to uplink an as-yet-unnamed movie
channel to China from Tele-Communications International Inc.'s Hong Kong facility
formerly used by MGM Gold before it went off the air in April 1998.

Although details remain sketchy, sources familiar with the
plan said that Singapore-based Fischer is planning to launch the channel in the summer. It
would apparently be run as a separate operating company from HBO Asia. The latter entity
is owned by HBO Pacific Partners, a joint venture between Time Warner Entertainment,
Paramount Films of Southeast Asia Inc., Sony Pictures Entertainment and Universal Studios
Inc.

HBO Asia marketing manager Caroline Wong said from the
company's Singapore base that she had "no comment" to make on HBO
International's China plans. Fischer, who had left his office for Christmas, did not
return calls.

A Singapore-based industry observer said HBO Asia was
"not in the loop" about the channel, adding the impetus was coming from New
York.

"I don't even know if they could call themselves
HBO in China. The brand is based on providing Asians with Hollywood product, and I
don't know how they could program the new channel" with that kind of product,
the source added, alluding to China's tight controls on Western programming and
branding.

To date, the number of full-time channels from beyond
Mainland China's shores that have secured carriage on Chinese cable systems can be
counted on two fingers -- China Entertainment Television, and Star TV's partially
owned Phoenix channel. Other overseas channels have had to make do with part-time carriage
on systems, and carriage in hotels that cater to Western clientele and housing compounds
for foreigners.

Phoenix got a little stronger foothold in China last August
when it launched Phoenix Movies without any fanfare, beaming a digitally compressed
encrypted signal from the AsiaSat 1 bird into China. Like its sister entertainment
channel, Phoenix, Phoenix Movies is a Mandarin-language service owned by Star TV (45
percent), Hong Kong-based Today's Asia Ltd. (45 percent) and China Wise International
Ltd. (10 percent).

But Phoenix Movies is only available in three-star and
higher hotels, and housing compounds for foreigners, using around 2,000 decoders supplied
by Star TV. The movies are Chinese-language titles from the heavy-hitter Golden Harvest
and Golden Princess libraries. There are subtitled Western movies as well.

The China market has been zealously pursued by Star
TV's owner, News Corp. chairman Rupert Murdoch, and the near-invisibility of the
Phoenix Movie channel surprised many.

Star TV corporate affairs director Lily Chan explained,
"We decided to have a low-key launch because we have a very targeted audience. This
is not for the mass market."

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