China Mobile Limited, the world's largest mobile operator,
yesterday acquired almost 20 percent of Phoenix Satellite TV
Holdings Limited from News Corp, believed to be a breakthrough in
China's regulatory system on telecom and broadcasting networks.
The three companies signed deals in Beijing yesterday.
China Mobile will get 19.9 percent of 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.
After the acquisition, Liu Changle, chairman of Phoenix, will
remain the biggest shareholder with 38 percent of the company,
followed by China Mobile and News Corp.
The parties declined to reveal the financial detail, although
previous reports in Hong Kong said the deal was worth HK$1 billion
Trading of Phoenix shares was suspended yesterday due to the
announcement, but before that the share 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 is 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, 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 operators 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 majority of their business revenue
comes from the Chinese mainland.
China Mobile also formed alliances with Phoenix, News Corp and
Star Group, which is News Corp's major operation on the Chinese
China Mobile will develop, aggregate and distribute multimedia
content from the three broadcasters on its network, which has 265
The mobile operator will also have preferred usage of Phoenix's
news and other selected programmes and Phoenix will have favored
access to China Mobile users.
The move is believed to be a major preparation for China
Mobile's launch of the third generation (3G) mobile system, which
will have broader bandwidth and be suitable for transmitting
content like music and video.
China has yet to release 3G licences, 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 get a licence from the State Administration of Radio,
Film and Television and it is extremely difficult for telecom
operators to get one.
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 has 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
will have a minimal impact on the secondary market.
The short-term benefit for Phoenix will also be minimal at a
time when mobile broadcasting is still a small area facing
uncertainties in regulation.
But Yu believed that China Mobile's acquisition of a stake in
Phoenix is 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 boost its holding
in Phoenix in the future.
(China Daily June 9, 2006)