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Thursday, April 3, 2008

NewsCorp's Murdoch predicts loosening of China media grip

by Michael MathesWed Apr 2, 7:52 PM ET
Agence France Presse

Press baron Rupert Murdoch predicted Wednesday that despite Beijing's tight controls, the media market will open up in China "in ensuing regimes" and provide major opportunities for global investors.

The billionaire also stressed that there is "no magic bullet" to the ongoing troubles of traditional media, and that news outfits must diversify geographically and technically in order to stay afloat.

"Things change from time to time and I believe that things are going to change and open up in China, just by the force of things," Murdoch, speaking at Georgetown University's McDonough School of Business, said of the largest potential media market in the world.

"I think you will find in ensuing regimes ... it's going to gradually open up and be a lot freer," with "opportunities arising in China over the next 20 years for worldwide companies, whether they be European or American or whatever."

The Australia-born, US-based chief executive of News Corp has invested in China for years.

He snapped up Hong Kong's Star TV in 1993 and turned it into one of Asia's largest satellite services, although he has faced charges of kowtowing to Beijing for dropping BBC news from the service.

"I've had that hang around my neck forever," Murdoch said in his speech to hundreds of university students.

News Corp is also part owner in Hong Kong's Phoenix Satellite Television as well as a local Cantonese channel, and his company, which bought the social networking website in 2005, is now a key investor in MySpace China.

Murdoch admitted that his Chinese operation "walks a very fine line" in terms of politically sensitive coverage in the communist-run state.

"It covers elections in Taiwan when (state broadcaster) CCTV does not. But on the other hand it doesn't have too much about what's going on in the central committee," he said.

His China investments began back when Jiang Zemin was president and allowed "little cracks" in foreign investment restrictions in the country's tightly controlled media.

"When he retired, the door was shut on everything, and has been kept firmly shut," Murdoch said, adding that US Internet firms Google and Yahoo were forced to contend with strict rules of operations by Beijing if they wanted access to the market.

In 2006 Google and Yahoo were among four US firms slammed for bowing to Beijing's demands that the Internet in China be censored to prevent Chinese citizens from seeing websites the government objected to.

"Part of it is just plain nationalism, and part of it ... was considered justified censorship in trying to control a population that size," Murdoch said.

But he is banking on China's swelling middle class to make its presence felt.

"There is a real wealthy middle class appearing, and those people ... are going to start to want to have a little more say in their country."

Murdoch acknowledged that he is sometimes labeled a monopolistic "antichrist," but he faced down the issue in a question and answer session.

"Is all media in one hand bad for democracy? Absolutely," he said. "But it's not (happening) as people thought.

"We are a tiny fraction of the media landscape. There are millions of voices out there, and we certainly don't have any of that sort of monopolistic view."

Murdoch said that his products are broadcast in 30 languages and reach three quarters of the world's population.

Murdoch warned that traditional media outlets need to shed outdated technology in order to survive.

"Technology is going to continue to destroy all the old ways and old assumptions of doing business, most especially in the media," he said.

"There is no magic bullet, no one-size-fits-all solution," he said. "To stay ahead of the competition, a media company needs to diversify geographically so it can reach more people."