View From City Road: Murdoch places another piece

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The Independent Online
StarTV's acquisition of the rights to 98 Orion movies is another piece in the giant Asian broadcasting puzzle being assembled by Rupert Murdoch, whose dollars 525m purchase of two-thirds of the loss-making Asian satellite broadcaster last July represented one of the arch-gambler's biggest punts to date.

By itself the deal is relatively insignificant. It gives the loss-making Star access to crowd-pullers such as Terminator, Robocop and Silence of the Lambs, but just for paid-for broadcasting.

As of today only a tiny percentage of the Star network is subscription- driven. The Orion movies, plus more than 20 new titles a year under a recent separate deal with PolyGram, will accordingly be available only to viewers - who are prepared to pay for them - in countries which can access the encrypted Star Movies channel.

For the moment that means Taiwan and the Philippines, which account for barely 2.5 million in total of the estimated 42 million Asian homes serviced by Star channels. Nevertheless, Star Movies, with its mixture of Western and local films, is a cornerstone of Star's approach to the Asian market.

The aim is to repeat the trick which transformed BSkyB's revenues and convert viewers of open channels into subscribers to encrypted ones, swapping the vagaries of generating advertising revenues in the fragmented Asian market, for the more secure territory of the standing order.

The deal, and others like it which are doubtless under discussion, also addresses another key strategic issue for Star. Numerous new Asian footprint satellites are being planned for the next few years and cable operators are making significant headway in cabling Asian cities.

Buying Star has given Mr Murdoch a headstart, but unless he can sew up the programming that will drive the next stage of the battle for Asia, he will soon find his expensive competitive advantage disappears.