MURDOCH VAULTS INTO CHINA WITH A $5.4M NEWS DEAL

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The $5.4 million joint venture Rupert Murdoch announced last week with state-owned The People's Daily-China's largest-circulation newspaper-will make him the first Western media company to provide news content to communist China.

The joint venture between News Corp. and People's Daily, to be called Beijing PDN Xinren Information Technology Co. Ltd., is authorized to "explore and develop a range of opportunities in China's rapidly developing information technology sector" including online services, digital mapping and electronic publishing.

Other Western media companies have tried to provide news in China and failed, including The New York Times, which about a year ago tried to launch a version of its Sunday magazine in China, but was blocked. The Times is said to be designing a new version of the magazine that omits news and focuses exclusively on lifestyle content.

"Officially, Rupert Murdoch is going in not as a news medium, but as an entertainment and sports medium. But now he is supplying People's Daily with news. That's for now. If the relationship stays good, who knows where it can go," said Asian marketing specialist Patrick Chu, president of Loiminchay Advertising, New York."

"The actual business impact of this is rather far off, but the impact on his existing business interests in China is very immediate," said Michael Wolf, partner and head of the media and entertainment practice of management consultant Booz Allen & Hamilton, New York. "Everywhere in the world, media and access to audiences, in one way or another, is regulated. And part of what Murdoch has been very successful in doing is making regulators comfortable with him and his properties."

Steven Chang, media director of Saatchi & Saatchi Hong Kong, said the latest Murdoch move in China is part of a disciplined, "step by step" campaign to make friends, and eventually money, in China. "He's trying to build a bridge with China," Mr. Chang said. "He's doing it step by step. The projects are getting bigger and bigger."

The new venture is one in a series of reparations Mr. Murdoch has made to re-ingratiate himself with Chinese officials, whom he infuriated when, after acquiring Hong Kong-based satellite network Star TV in 1993, he said the service could pose "an unambiguous threat to totalitarian regimes everywhere."

The statement sparked a cold war between Mr. Murdoch and Beijing that led the Chinese government to clamp down on the sale of satellite dishes.

Mr. Murdoch has painstakingly rebuilt that relationship through a series of overtures, including publishing the biography of China's leader, Deng Xiaoping, written by his daughter, through News Corp.'s Harper Collins publishing unit.

Contributions from Geoffrey Lee Martin in Sydney and Mike Laris in Beijing.

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