Media: Will Rupert's eastern Star turn to dust?: Satellite TV seemed to offer Murdoch riches in Asia, but he faces a dish of difficulties, says Maggie Brown

Eastern Asia has seen more imperial dreams shattered than fulfilled; and there are those who believe Rupert Murdoch's vision of a global communications empire could founder there. But then, almost every advance he has made in his career has been accompanied by jeers from onlookers convinced that this time he has overreached himself.

Last month he paid his first visit to India, a huge potential market for the Hong Kong-based Star satellite channels in which he bought a 63.6 per cent stake eight months ago for pounds 350m. He spoke of his 'amazement and optimism' over the country's prospects, and promised to make quantities of films and entertainment programmes locally.

More controversially, he talked about the difficulties international satellite broadcasters face when operating in politically sensitive countries, and said the Chinese were unhappy about BBC World Service Television, which occupies a Star channel. It has already had a big impact on English-speaking Indians, while media consultants predict that unrestricted access to foreign news will play as important a part in opening up China as foreign media had in bringing down the iron curtain and Berlin wall. When the Indian Prime Minister, Narasimha Rao, expressed doubts about the image of India circulated by the Western media, Murdoch said he understood why people should want to see television reflect their own culture.

These diplomatic remarks were in sharp contrast to speeches Murdoch made in London last September and in Adelaide the following month. In the first he spoke of the power of satellite TV to challenge totalitarian regimes; in the second he said: 'Technology can get past the politicians and regulators.'

This incensed the rulers of China, which is Star's largest potential market. Partly in response to Murdoch's remarks, the Chinese have said they are considering whether to license satellite dishes to limit their spread.

'Rupert's still a bit confused,' a close watcher of the Asia satellite scene said last week. 'When he arrived in Asia, China was the great hope. Then he went to India and within 24 hours he had decided the future lay there. He's a man of brilliant decision, courageous determination and loads of money, but I wonder whether he's likely to remain in Asia, given his problems.'

These are manifold. Apart from a dispute with World Service Television (WSTV) - likely to be dropped from Star this year whatever the result of a pending court case - Murdoch is in trouble with Wharf Cable, the Hong Kong company which has exclusive rights to pay-TV in the colony and claims Star is not delivering it the channels it promised since it began last October. He is also meeting growing international opposition from the companies that provide the programming for the channels, which resent his attempt to exert a stranglehold on satellite television in Asia as he has succeeded in doing in Europe.

Star is making an annual loss of pounds 40m- pounds 55m. It has already had three chief executives in the seven months since Murdoch bought it - the latest of them Gary Davey, formerly of British Sky Broadcasting. An emollient Australian, he has been hand-picked for the job of smoothing Star's way with the Chinese. Murdoch has bought a house in Hong Kong so that he can take a personal role in Star's rescue.

When the BBC negotiated in 1991 to put its news and documentary channel WSTV on Star, launching its worldwide media ambitions, the Hong Kong satellite system was owned by its founder, Li Ka-shing, a businessman who has close links with China. Apart from locally produced channels, the Star package on the AsiaSat1 satellite includes MTV, the popular all-music station, and Prime Sports, both chiefly American-owned. A second AsiaSat is to be launched at the end of this year.

Star reaches well over 40 million households from the Middle East to China, but not all customers receive WSTV. China's cable system, through which the satellite station is mostly broadcast, can accommodate only a limited number of channels; and the officials who decide which ones should be distributed often leave out the BBC's news station. In Peking, where Star is in about 5 per cent of TV households, WSTV is in only 1 per cent.

The connection with the BBC, although it gives weight and credibility to Star's news output, has drawbacks. WSTV draws blame for BBC programmes it has not broadcast. The clearest example so far is last autumn's chilling BBC2 Timewatch on Mao Tse-tung which reported that he had a penchant for young girls and that the Red Guards indulged in cannibalism. This provoked anger in China, and is said to have fuelled Murdoch's doubts about whether to keep WSTV.

Almost as soon as he took over Star, Murdoch hinted that he was thinking of a break. He maintained that the agreement to broadcast WSTV on Orbit, a satellite covering the Arab world, was in breach of Orbit's contract with Star. The BBC denied this and obtained an injunction against any move to end the contract. However, the 10-year contract has a break clause allowing either party to pull out at the end of this year. It is virtually accepted that Murdoch will take advantage of this to dispense with WSTV, even though the news channel, with its upmarket viewing audience, accounts for 45 per cent of Star's advertising revenue.

While Murdoch seemed likely to replace the BBC's news service with Sky News, he has been telling other satellite broadcasters that he does not see why Star needs a news channel - and that, given the credentials of some governments in the region, it may be better off without one.

While Star may be able to drop WSTV, can it do without the other internationally owned channels riding on it, in particular MTV? The station is owned by Viacom which, like other US entertainment groups, is growing uneasy about Murdoch's near-monopoly of access to satellites over large swathes of the globe. MTV in Europe is on the Astra satellite used by Murdoch's Sky channels and, although not part of the Sky package, it can reach viewers only through the satellite dishes and decoder boxes that Sky supplies. Pay services rely on the encryption system and payments centre Murdoch has devised.

Satellites rely for their appeal on the wide range of targeted services they provide. If Star were to lose both WSTV and MTV, its appeal would greatly diminish. 'The major brand-holders are waking up to the fact that their brands make the distributor's name, rather than vice versa,' says Chris Irwin, WSTV's managing director.

WSTV has no intention of disappearing from Asian skies. If it were to leave Star it could be accommodated on one of a growing number of satellites serving the region. The Chinese-based Apstar 1, to be launched in June, has the news channel CNN, the film channel HBO and Australian television.

Apstar 2, covering much the same area as Star, should be operating within the year. Thaicom, based in Thailand, was launched last December. Some believe the future may lie with satellites covering smaller areas, but even so, satellite footprints never conform with national boundaries.

No tycoon can look at Asia without salivating at its lucrative potential. But if Murdoch finds that the costs of doing business there are greater than the rewards, he would not be the first.

(Photograph omitted)

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