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November 28, 2005 10:02 pm

Star to concentrate mainly on India

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Star Group, News Corporation?s television arm in Asia, is unlikely to make any ?significant? money in its loss-making Chinese business for up to?two years, its chief executive said in an interview that echoed recent frustration expressed by Rupert Murdoch.

Star, which operates in 58 countries, is ?very close? to making money in its Chinese TV business,? but has suffered from regulatory restrictions that prompted Mr Murdoch, News Corp?s chairman, to complain that he had hit a ?brick wall? in China.

?We are very close to breakeven, but I really don?t see that?s the point,? said Michelle Guthrie, chief executive of Star, in an interview.

?The end game is not to make a dollar, but to build a viable business in terms of creativity and revenue opportunities.?

Mr Murdoch surprised media watchers in September when he appeared to abandon a long standing charm offensive in Beijing and publicly accused the Chinese authorities of being ?paranoid? about the foreign media.

Star?s Chinese operations, which are in effect subsidised by the company?s 13 year old and highly successful business in India, were unlikely to make ?any significant contribution to profits in the next one or two years?, Ms Guthrie said.

While Beijing has thrown open sectors such as manufacturing and retail, it has, over the last decade, granted the likes of News Corp, Viacom and AOL Time Warner only limited scope to enter what is the world's largest untapped media market.

This year, officials have even been backtracking from a planned cautious opening of the TV production business to foreign investment, citing concerns over ?national cultural security?.

Ms Guthrie said: ?We were hoping that there would be deregulation allowing 51-49 joint ventures in?co-production of programming, but it appears in the short-term, we and other multinational media companies won?t be able to take advantage of that.?

Ms Guthrie, who succeeded James Murdoch at the head of Star in November 2003, said the TV company had no plans to duck out of China, but would be tailoring its investments to suit a business primarily driven by its Indian operations.

?We can?t take the position, as some foreign media companies have, that we won?t be in China potentially for the next five years,? she said.

?If we tried to do that and then tried get in at a later date, we?d really be doing it from a standing start.?

She added: ?I don?t think it?s an option to significantly reduce that investment because it?s one for the future.?

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