City & Business: Eastern promise

WAS Andrew Neil, editor of the Sunday Times, pressurised into last week's grudging climbdown on the bribes to Malaysia story? He insists not, and I guess we must believe him. There was no climbdown in any case, he says - merely a 'clarification'. One thing is certain, however. The story's repercussions must have irritated the hell out of his proprietor, Rupert Murdoch.

From tiny, unpretentious offices in Hong Kong, Mr Murdoch presently devotes himself full-time to the task of turning round Star TV, the Asian satellite television service he took over last summer. With his mind focused on the task in hand, I doubt Mr Murdoch cares very much about the impact of the Sunday Times story on British business - which now faces a Malaysian trade embargo. But he would be highly exercised about its potential to damage Star.

Like many countries in the Far East, Malaysia is closed to Star; it could be argued that Mr Murdoch loses little if his newspapers cause offence. But to get the most out of his new business, Mr Murdoch must eventually persuade these markets to open their doors to him. China with its vast potential for satellite remains deeply hostile; only last week a new law came into force banning the use of satellite dishes.

It's possible these days to buy workable dishes not much bigger than a hand, so there's plenty of scope for illicit reception of Star. In practice however not many Chinese are going to risk imprisonment for the privilege; if Mr Murdoch is ever going to make headway, he will have to persuade the authorities to ease their stance. Stories of the Sunday Times variety send out all the wrong signals to edgy political leaders; if Mr Murdoch can accuse them of corruption through his newspapers, what might he do through his TV interests.

Mr Murdoch still believes Star is going to prove the best investment he ever made, although he admits it's going to be an uphill struggle. In calculating how much to pay for Star, China was always in for nothing - icing on the cake if ever it came good - he insists. The main target markets in the short term are Taiwan and India. Medium-term, it's the Philippines and Indonesia. Only very long-term, after the turn of the century, does China enter the equation. Who knows what the political landscape will look like by then? Perhaps he's got it right, but I'm still sceptical. Is hard to believe a canny Hong Kong businessman like Li Ka Shing, who knows more about China and other Far Eastern markets than Mr Murdoch ever will, would have sold out if the business really had so much potential.