Inside Line on AOL, News Corp and TVB Deals with CCTV

GUANGDONG --- In late October, the official Chinese state media began carrying details of the "landmark" broadcasting accords reached by China Central TV (CCTV) and international media giants AOL Time Warner and News Corp and a similar deal struck with Hongkong's leading broadcaster, TVB further completing the various pictures painted by each side in the most hyped press stunt in recent years. (see related article)

The main point was made by SARFT Minister Xu Guangchun who was quoted as saying that the agreements are subject to qualifications that China Central TV (CCTV) could be broadcast in the American market which is regarded as a major breakthrough for the state owned broadcaster and the Chinese Communist Party.

According to the China News Service and other sources, the AOL deal represents the first time a CCTV channel targeted at foreign audiences will be carried on a 24-hour basis on US cable systems. Under the AOL deal, CETV, a Hongkong-based Mandarin-language channel acquired by AOL in June 2000, will be offered to Chinese viewers in South China's Pearl River delta starting next year in return for China's national English-language channel CCTV-9 being available for broadcast on some Time Warner cable channels next year.

A senior official with AOL subsidiary Turner Broadcasting System Inc. has reported that AOL is actively looking for strategic Chinese investors familiar with China and its television industry, echoing failed moves by original CETV founder Robert Chua soon after the channel's launch. Unlike Chua, AOL is said to wish to retain its 50 percent stake in CETV after adding the new shareholders.

Meanwhile, the Satellite and Cable Weekly confirms that News Corp invested Phoenix Satellite started legal broadcasts to the delta with SARFT approval on October 18, becoming the first foreign service available in the region. Since both CETV and Phoenix have been widely available in the region since 1997, the actual date is significant to the companies alone.

Under the terms of the joint venture, Phoenix will put the CCTV-4 Chinese language channel on U.S. satellite television platforms and the two firms will also co-produce for Chinese-speaking viewers worldwide and jointly promote both companies’ channels in the United States. Both parties will hold a 50 percent stake in the joint venture, which is registered in the British Virgin Islands.

CMM-I notes that with the news that Hong Kong's TVB will also launch a new channel joint-venture with CCTV and an ongoing agreement with Encore owned International Channel that includes carriage of CCTV Chinese language blocks in the US, it has been an excellent month for Chinese global broadcasting ambitions.

While CCTV basks in its negotiating prowess, the foreign companies involved are now coming to terms with what are sure to be projects fraught with obstacles going forward. For AOL, the commercial irrelevance (and political significance) of CCTV-9 programming in the US would seem to be the first challenge to overcome, while CETV still requires strong local production partners to generate attractive content.

For News Corp and Phoenix, the immediate challenge is how to deliver the US side of the bargain with its niche interest among Chinese speaking communities. Moving forward the CCTV - News venture faces a tough fight to win over this niche, especially as it comes up against the CCTV-TVB partnership with its strong production and archive resources.