MGM Gold pulls the plug on pan-Asian channel

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HONG KONG -- MGM Gold, the cable and satellite premium entertainment channel owned by the U.S. film studio Metro-Goldwyn-Mayer Inc. (MGM) and Encore International, has shut down its Asian operations.

MGM Gold had a reach of two million subscribers in the region, spread throughout eight countries and divided into four separate markets of Southeast Asia, Taiwan, China and India

The station will go off the air on April 6, by which date half of the planned $46 million investment in the branded entertainment channel will have been invested since the network launched two years ago, according to MGM Gold President and General Manager Steve Smith.

He explains that the original profit objectives "were no longer achievable" in Asia's current cable environment.

MGM Gold "is closing up shop because the markets out here have not developed as we had hoped. We had a remote chance of return, so we had to face reality and pull the plug now," he says.

The problems facing the film channel included Asia's currency crisis, slow development of cable and direct-to-home broadcasting, programming controls in China and exorbitant costs in India.

The Southeast Asian markets, including Hong Kong, Singapore, Thailand, Indonesia, Malaysia, and the Philippines, were too susceptible to currency devaluation so the cable and DTH (directto-home) markets developed more slowly than MGM Gold had predicted, Mr. Smith explains.

Taiwan, one of the most developed cable markets in Asia, proved too competitive. The market had 12 film channels so subscription fees had to be kept low - making MGM Gold dependent on advertising revenue - "but it was also tough to get ratings," he adds.

China and India, meanwhile, proved problematic for other reasons. The Chinese authorities did not loosen their foreign broadcast restrictions as hoped, so the censorship regulations "conspired against us,'' he says, and the Indian market was "too expensive," requiring a bigger investment to penetrate than MGM Gold had anticipated.

Copyright April 1998, Crain Communications Inc.

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