The loss of the $160m (£100m) Apstar 2 satellite it was carrying is a severe blow to numerous networks competing in Asia's fast-growing satellite television market. Among the 13 companies with broadcasting capacity booked on Apstar 2 were Turner Broadcasting, the Discovery channel, the Disney channel, MTV Asia, Home Box Office Asia, NBC International and Reuters Television. The satellite was owned by a Peking-controlled company in Hong Kong, APT Satellite Company.
The launch failure gives added advantage to Mr Murdoch's Star TV system, which already has a head start on would-be rivals. Star TV broadcasts out of Hong Kong and is carried on the AsiaSat 1 satellite.
Yesterday's explosion will not only delay new enrants into the Asian airwaves, it will put on hold the expansion plans of many other operators which at the moment use the more limited Apstar 1 satellite.
Apstar 2, built by Hughes Aircraft, would have covered two-thirds of the world's population, from Australia through India to North Africa, and was designed to carry more than 100 digitally-compressed television channels that could be encrypted to target specific audiences.
Turner Broadcasting, which beams down from Apstar 1, said it was "disappointed" with the failed launch. The loss of Apstar 2 leaves broadcasters scrambling for alternative carriers. But AsiaSat 1 is full and Star TV has power of veto over competitors using AsiaSat 2, due to go into orbit later this year.
The Chinese-built Long March 2E rocket exploded about a minute after the early morning launch from Xichang space centre in Sichuan province. Embarrassingly for the Chinese authorities, who are very sensitive about such mishaps, the launch was broadcast live on state television and 100 foreign executives were present at the site.
"About 45 seconds after a smooth lift-off there was an explosion, apparently during the separation of boosters," said a Western television executive who witnessed the accident. "There was a series of crackles and bangs. It was very spectacular. There wasa big orange fireball in the sky. The main rocket dropped behind a mountain and exploded," he said. "The satellite crashed into another mountain."
The explosion casts another question mark over China's civil space industry. The country's Long March programme, operated by the state-owned Great Wall Industries, has gained an impressive list of customers by undercutting the prices charged by other satellite launchers.
In recent years, satellite launching in China has had a patchy record. The country's East Is Red 3 satellite was launched successfully last November but had to be abandoned this month due to a malfunction in its positioning systems. Last April, an explosion during fuelling of a $75m weather satellite on the Xichang launch pad destroyed the orbiter, killing one person and injuring 20.
The Foreign Ministry spokesman, Shen Guofang, said yesterday the cause of the latest problem was under investigation. "The cause of this incident is some technical problem, and I don't believe this will adversely affect the confidence in China's ability to launch satellites," he said.