Hong Kong: Rupert Murdoch’s News Corp said on Monday that it will sell control of its three Chinese TV channels to a fund backed by China’s No.2 media company, in a pullback from the market after years of difficulty.
The deal would see China Media Capital acquire a controlling stake in News Corp’s Xing Kong, Xing Kong International and Channel Mainland China channels, along with its Fortune Star Chinese movie library, News Corp said in a statement.
Established in 2009, China Media Capital is a private equity fund with 5 billion yuan ($739 million) in assets under management and a focus on investments in the media industry.
It is backed by Shanghai Media Group (SMG), China’s No.2 media company and the dominant player in Shanghai, as well as China Development Bank and China Broadband Capital.
The move could mark the beginning of a wind down for News Corp in China’s tightly controlled media market, which has proved highly frustrating to the company and its Western peers after numerous limitations and restrictions by Beijing.
The terms of the deal were not disclosed, but the three channels combined were generating no more than $50 million annually in revenue at the time of the deal, said Vivek Couto, a media analyst at Media Partners Asia.
“News Corp, after two decades in China, has done the inevitable in the last few years,” Couto said. “They see the best option to grow in the market is to make sure the business is in control of local hands.”
Couto predicted that China Media Capital could eventually sell off the company, or even take it public.
“This partnership is an extension of our long-term cooperation with News Corp,” China Media Corp chairman Li Ruigang, who is also president of SMG, said in a statement. “The entry of Chinese capital into the international media market will help facilitate its changes and development. Today’s agreement represents a first step into that direction.”
News Corp and global rivals like Time Warner Inc and Viacom Inc held out great hopes for China when they launched TV channels there starting in the late 1990s, hoping to attract mass audiences in a nation with 1.3 billion potential viewers.
But their efforts have been met largely with disappointment, as China has limited their mass distribution largely to the southern province of Guangdong and strictly limited their ability to attract audiences in other parts of the country.
A year ago, News Corp conducted a major overhaul of Star TV, its Asia flagship based in Hong Kong, in a move that many saw as acknowledgement of the company’s growing emphasis on India and its lack of progress in China.