A promotional activity of News Corp's Xing Kong channel in Huaihai Road, Shanghai. The TV channel has been facing challenges such as low penetration in the Chinese mainland. [China Daily]
Rupert Murdoch's News Corp said on Monday that it will sell control of its three Chinese TV channels and a movie library to a private equity fund backed by Shanghai Media Group (SMG), China's No 2 media company, signaling the growing appetite of domestic media companies for overseas asset buys.
Under the deal, China Media Capital will acquire controlling stakes in News Corp's Xing Kong, Xing Kong International and Channel [V] Chinese Mainland channels, along with its Fortune Star Chinese movie library, which has a total of 757 Chinese-language titles, 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 is focused on investments in the culture and media industry.
SMG, China Development Bank and China Broadband Capital have backed the fund. The News Corp deal is the company's first transaction so far.
The two companies will establish a joint venture to be headquartered in Beijing, the statement said.
The terms of the deal were not immediately available, but industry experts said the purchase signals greater opportunities for profits.
The channels are available only in Guangdong province and some locations in the mainland. The restrictions have been a bottleneck for the business growth of the channels in China, said Yuan Fang, a professor at the Communication University of China.
"Due to the restrictions, foreign media companies cannot make much money in China," said Yuan, an expert on the television market. "After being taken over by the Chinese company, these channels are now likely to be accessible at more places."
Yuan said the deal will help fund its overseas moves. "Xing Kong is a satellite television channel with a large number of overseas viewers and hence an ideal tool to bolster the country's global image," he said.
Media moves have been gathering momentum in China of late. Southern Daily Group recently failed in its bid to acquire Newsweek magazine.
Yuan said Xing Kong's entertainment focus and the fact that it does not have any ideological leanings, along with News Corp's close relations with the government helped the deal.
"The long-term cooperation with News Corp has facilitated the deal. Chinese capital will actively promote the development of international media," said Li Ruigang, chairman of China Media Capital and president of SMG, in a telephone interview with China Daily on Monday.
He said the acquisition came after strategic discussions with both sides spread over six months.
"The purchase is a pure business deal," Li said. He said the fund would continue to invest in media projects both at home and abroad.
