Star TV converges with Hong Kong's Cable & Wireless

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HONG KONG--Asian telecom giant Cable & Wireless and RupertMurdoch's Star TV have officially signed the terms of their joint venture to provide a full range of interactive home entertainment, digitalTV and Internet services in Hong Kong and the rest of Asia.

"You've all heard of the AOL and Time Warner deal. Well, we'd like tothink we've done [the convergence joint venture] first," says Star TVChairman-CEO Gareth Chang.

The joint venture aims to deliver services to customers through TVs andPCs using a combination of direct satellite delivery, high-speed broadbandlines and other technologies. A limited selection of free-to-air channelsare already offered via satellite and set-top boxes, but a full-scale rollout of the proposed pay-TV service, including about 50 channels, dependson whether a license will be granted to the joint venture by the Hong Konggovernment.

But Star TV and Cable & Wireless are confident their bid will be amongthe winners. They will use Cable & Wireless HKT's broadband network technology, existing iTV video-on-demand interactive TV network and Internet services, along with Star TV's content and its expertise in satellite broad-casting and programming, to create a unique package of converged entertainment and information services for consumers.

The joint venture will be operated as an independent company with its ownmanagement team and board of directors, led by David Prince as executivechairman.

Mr. Chang adds: "The signing of the agreement brings us one step closer tothe realization of the vision to bring to Hong Kong a convergence productof entertainment, information and online communications."

Given the new venture's pay-TV operating model, advertising on Star TV'schannels that already carry ads will continue, but will be limited on newchannels, Mr. Chang said at a Jan. 19 press conference.

The joint venture company will initially be 60%-owned by Cable & WirelessHKT and 40% by Star TV, with warrants to potentially increase Cable & Wireless HKT's equity interest to 70%.

Cable & Wireless HKT is Hong Kong's major full-service communications provider, with services including land and mobile telephony, international calls, specialized fax and data products, Internet access, multimedia services, satellite links, and telecommunications equipment and systems.

Star TV is a subsidiary of News Corp., offering both subscription and free-to-air TV services in seven languages in Asia, India and the Middle East.

Copyright January 2000, Crain Communications Inc.

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