In what is being regarded as a breakthrough in China's
regulatory system on telecom and broadcasting networks, China
Mobile Limited, the world's largest mobile operator, yesterday
acquired almost 20 percent of Phoenix Satellite TV Holdings Limited
from News Corp. The three companies involved signed deals in
Beijing yesterday.
China Mobile will get 19.9 percent stake in Hong Kong-based
Phoenix from the flagship company of media tycoon Rupert Murdoch
while the latter will reduce its holding in Phoenix to 17.6
percent.
Following the acquisition, Liu Changle, chairman of Phoenix,
remains the biggest shareholder with 38 percent of the company
followed by China Mobile and News Corp.
The parties declined to reveal the financial details although
previous reports in Hong Kong said the deal was worth HK$1 billion
(US$128 million).
Trading in Phoenix shares was suspended yesterday because of the
announcement but before that the price had risen by almost 3
percent to HK$1.46 (19 US cents). The price has gone up by more
than 20 percent in the past four days. China Mobile's share price
dropped by almost 4 percent to HK$40.10 (US$5.14) yesterday.
"It's a good development for every player in the market and the
deal itself already means a breakthrough in the regulation of the
broadcasting system," said Li Yifei, president of MTV China. MTV
come under another US media giant Viacom which competes against
News Corp in China and formed an alliance with China Mobile last
year.
Under current regulations, mainland telecoms and broadcasting
network operators can carry out either telecoms or broadcasting
operations--but not both.
Although both China Mobile and Phoenix are based and listed in
Hong Kong, the overwhelming bulk of their business revenue comes
from the Chinese mainland.
China Mobile also formed alliances with Phoenix, News Corp and
the Star Group which is News Corp's major operation on the Chinese
mainland.
China Mobile will develop and distribute multimedia content from
the three broadcasters on its network which has 265 million
subscribers. The mobile operator will also have preferred usage of
Phoenix's news and other selected programs and Phoenix will have
preferred access to China Mobile users.
The move is believed to be a major part of China Mobile's
preparations to launch the third generation (3G) mobile system
which will have a broader bandwidth and be suitable for
transmitting content such as music and video.
China has yet to release 3G licenses but China Mobile is tipped
to be in the running for one.
However, it may not be plain sailing as mobile broadcasters are
required to be licensed from the State Administration of Radio,
Film and Television and it's extremely difficult for telecom
operators to secure such a license.
News Corp, which is said to be dissatisfied with the regulation
of its Star TV in China, hinted in February that it would sell its
stake in Phoenix. It's now successfully reduced its share in the
company while forming an alliance with China Mobile.
Glenda Yu, a media analyst with BOC International, said the deal
would have a minimal impact on the secondary market.
The short-term benefit for Phoenix will also be minimal at a
time when mobile broadcasting remained a small segment of the
market which faced uncertainties over regulations relating to it.
But Yu believed that China Mobile's acquisition of a stake in
Phoenix was just the start of a wave of buying.
Andes Cheng, Hong Kong-based telecom analyst from South China
Research Ltd, also believed that China Mobile may increase its
holding in Phoenix in the future.
(China Daily June 9, 2006)