Murdoch hits the brick wall of China

Despite his best efforts to please Chinese officials, the News Corp mogul's hope of establishing a media presence on the mainland is fading, says Peter Goff

South Morning China Post
Wednesday, September 21, 2005

By Peter Goff

Beijing --- Rupert Murdoch is used to getting what he wants, but after 20 years of wining and dining Beijing officials his dream of securing 2 billion Chinese eyeballs is still a distant one, and for now at least it appears to be fading.

Over the years, China has sent the mogul mixed messages: at times appearing enthralled to be in his enlightened company, but lately incensed by the liberties that leaders say he has been taking.

Things were rocky before. In the early 1990s, when the world was high on the whiff of fallen dictatorships, Mr Murdoch bragged that people like him -- the elite who controlled the airwaves -- would bring about the end of totalitarian regimes everywhere. If these comments amused the powers-that-be in Beijing they hid it well, forcing the News Corp man into turbo kowtow mode.

The BBC, which for some reason never seemed to hold Mao Zedong and his successors in as high esteem as CCTV, was dropped from Star TV's list of channels. Chris Patten's irreverent memoirs were also considered inappropriate for Mr Murdoch's stable, but on the other hand Deng Xiaoping's daughter was welcomed with open arms. While Hollywood swooned over one of Beijing's nemeses, the Dalai Lama, Mr Murdoch publicly laughed him off as "a very political old monk shuffling around in Gucci shoes." In getting closer to the action, Mr Murdoch and his Chinese wife Wendi Deng bought a lavish courtyard home in Beijing recently, just a two-minute limo ride from the party's leadership compound.

As Beijing seemed to warm to him and his ilk -- or at least to their wads of investment dollars -- Mr Murdoch proclaimed Jiang Zemin to be his very good friend. While News Corp's channels -- as with Viacom, Disney and others -- were technically restricted to Guangdong, top hotels and the homes of foreigners, they were quietly building market share in legal nowhere land. A Chinese solution to a Chinese problem, they called it.

But it has started to untangle. Despite the fact that foreign channels must sell their content through state-owned China International Television Corp -- which extracts a large fee for its role as censor-in-chief -- Star TV went west, investing about US$40 million in a venture with Qinghai Satellite in a bid to build a nationwide audience. A bold move, some would say. Or, "just plain stupid", says one industry insider. Either way, it did not get far. After a few months of awkward silence, officials took aim and blasted it out of the Gobi Desert, following up with a flurry of rules that drew wide and clear lines in the sand - thus far foreign media investors shall go, and no further.

Then it got worse for News Corp when a former distribution manager, Jiang Hua, filed a lawsuit against one of its shell companies, Beijing Hotkey, claiming it owed him a big chunk of ill-gotten gains -- money, he alleged, that News Corp made by illegally leasing its channels around China. Mr Jiang took his tale to the media, armed with piles of incriminating cheques and invoices. Industry and Commerce Administration officials swooped on Star TV's offices, confiscating files and company seals. A customs official confirmed that News Corp was also being investigated for possible illegal decoder imports.

Those in the industry are exasperated, saying they could never hit break-even if they stuck strictly to the rules, but there is tension in the airwaves. Will this result in a quick slap on the wrist or will officials want to teach a sterner lesson?

At a media conference in New York last week, Mr Murdoch, 74, said his company has hit a "brick wall in China". "A year ago I would have said there's a lot of opening up going on," he said. "The present trend is the reverse." He must be wondering if he will ever get a decent bite of the mainland's television advertising pie.

Peter Goff is a Beijing-based journalist.