Chinese network is on brink of collapse

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HONG KONG -- Asia's "no sex, no violence, no news" satellite TV boss, Robert Chua, is considering legal action against a mainland consortium which he claims has reneged on a deal that will probably cost him his $40 million China Entertainment Television (CETV) network.

Chua says he will be forced to close his Hong Kong-based network at the end of this month if an 11th-hour "white knight" investor is not found. Eighty percent of CETV Family Channel was sold to the consortium at the end of October last year at a cost of $34.3 million-- $11.8 million in cash and the rest deferred for five years at no interest.

At a press conference held in Hong Kong on January 5, Chua said he would seek to recover "significant damages that have resulted from the failure of the buyers to fulfill their obligations under the purchase agreement."

About half of CETV's 180 staff members have been laid off in anticipation of CETV's demise. Chua, who has sunk about $8 million of his own money into the $40 million venture, said he could no longer compete with Rupert Murdoch's China- focused Phoenix joint venture without mainland Chinese partners.

He said he believed Phoenix's advertising income in 1996 was $24 million--a figure he couldn't hope to match without the hard- to-come-by official landing rights granted by mainland broadcasting authorities. So far, Phoenix is believed to be the only satellite broadcaster granted such rights, and then only for the southern Chinese province of Guangdong. The mainland consor- tium, which Chua believed had top-level government connections, did not give reasons for failing to honor the agreement, Chua said.

"My connections with China are based on professionalism and trust. It is a shock and surprise to me that this has happened," he said. The three-year-old CETV Family Channel, which relies solely on advertising revenue, has had an on- going battle to attract and keep blue-chip advertisers.

Copyright January 1998, Crain Communications Inc.

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