Go East, Media Moguls

They're rushing to China--and finding a warm welcome

Six years ago, Rupert Murdoch was persona non grata in Beijing. The News Corp. chairman, just months after buying control of Asia's STAR TV, had boasted in a speech that technology such as his posed "an unambiguous threat to totalitarian regimes everywhere." Beijing took umbrage and retaliated by reiterating its ban on private ownership of satellite dishes. But by last December, all was forgiven. Murdoch was toasted at a banquet in Beijing's state guesthouse by People's Republic President Jiang Zemin.

These are strange times in China. Relations between China and the U.S. are the worst in years, following new reports of human rights violations and revelations that the Chinese may have received nuclear secrets from a U.S. scientist at the Los Alamos National Laboratory. By late March, things could get worse. That's when a congressional committee is set to release a report expected to detail years of Chinese military technology theft.

PILGRIMAGE. But Western media giants see China as a massive untapped audience--and just about every media mogul, from Murdoch to Disney's Michael D. Eisner, is making a pilgrimage. Things are changing fast. Walt Disney Co. is negotiating with Hong Kong officials to build a $2 billion theme park and quietly talking with Shanghai about a possible second. Microsoft Corp. Chairman Bill Gates showed up in Shenzhen on Mar. 10 to launch Venus WebTV, a set-top box for Chinese cable watchers to surf the Net.

So far, U.S. media companies have scarcely tapped the nation of 1.2 billion people and 305 million TV sets. Foreign shows are still limited to 25% of all TV programming. ESPN, CNN, and MTV are among the dozen or so cable channels the Chinese allow, but most are limited to one- or two-hour blocks and seen mostly in business-class hotels and government buildings. "China has a huge appetite for content, and we can provide it," says Gareth C.C. Chang, the Chinese-born executive chairman of STAR TV. His company recently began production of sitcoms and news shows with government-owned production companies as partners.

Indeed, working with the government is a necessity. And the government, it seems, wants to work with the industry. In early March, a group of officials made the rounds of Hollywood studios looking for film-making partners. U.S. companies, meanwhile, hope that by teaming up with state companies, they can skirt rules that now limit the number of foreign films to 10 per year. Disney recently made the cut with Mulan, reversing a three-year ban on its products imposed after China deemed the Disney film Kundun sympathetic to the exiled Tibetan spiritual leader the Dalai Lama.

As its economy has weakened, China has become more accommodating. Deals with media companies could mean jobs for Chinese. And better programming should bring more to state-owned TV stations and cable systems. Last year, advertisers spent $2.1 billion on Chinese TV, says London-based Baskerville Communications Corp., which sees spending reaching $2.9 billion in 2000.

"The Chinese are avid TV watchers, and have far more disposable income than Westerners tend to think," says Philip D. Rich, executive director of AC Nielsen's Asian research efforts. Indeed, American-style programming has already had an impact in China. After an infomercial on its foldable bikes was aired, the U.S. company that makes them got orders for 100,000 in a week, says Elissa M. Myers, president of the 420-member Electronic Retailing Assn.

Still, it's TV shows, not bicycles or U.S.-China tensions, that interest most Chinese these days. Just ask 16-year- old Peng Jinglong, a Beijing high school student and a fan of the Cartoon Network's Tom and Jerry cartoons. "Chinese cartoons can't compare," he says munching on a burger. "American cartoons are more lighthearted and funnier. And the stories are better." Ted Turner couldn't have said it better.

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