Murdoch's Star in $240M Taiwan cable deal

Star's $240 million investment will buy it a 20 percent stake in the new Taiwan cable venture

In this story: High-speed upgrade World-class digital environment RELATED STORIES, SITES

By Staff and wire reports

TAIPEI, Taiwan -- Star TV, the Hong Kong-based unit of Rupert Murdoch's News Corp, will invest $240 million in the Koos Group's cable systems in Taiwan.

The deal, reached after six months of talks, could bring the first digital cable services to the island by next year. It could also boost Star's revenues in Taiwan, the second largest cable market in Asia after India.

Taiwan's cable TV penetration rate is among the highest in the world with over 80 percent of the population, or 4.5 million households, wired for cable TV.

High-speed upgrade

"Taiwan is Asia's most well-established and vibrant cable market," Star chief executive officer James Murdoch said at a press conference.

"However, the question of addressability remains a central one in Taiwan's future cable development. There are virtually no set-top boxes in the home, and cable systems remain largely one-way analog."

Star will invest $240 million in about 29 cable partners owned by Koos Group. The investment will be used to ready their equipment for faster broadband delivery, allowing interactive television and high-speed Net service.

Star will own 20 percent of the as-yet-unnamed new holding company.

Star is "investing $240 million in individual cable systems on the island and in the formation of a service company to provide new services to cable customers in the years to come," said Murdoch.

The holding company aims to extend the Koos cable network and help it install digital equipment in the second half of 2001 to provide the first digital cable services in early 2002, a statement from the two companies said.

Analysts say the deal gives Star instant access to better content distribution deals, and recognition as a broadband-savvy media play.

World-class digital environment

"Leveraging Koo's extensive cable business interest in Taiwan and Star's expertise in deploying digital technology, the deal will transform the Taiwanese cable landscape into a world-class digital environment," a press statement said.

News Corp, the world's largest satellite TV provider, said in March it may raise $95 million to pay for an investment in Taiwan cable TV networks.

Gigamedia, Koos Group's broadband affiliate in Taiwan, backed out of negotiations with Star in March to invest more than $100 million in an Internet television deal.

Star, or Satellite Television Asia Region, is News Corp's satellite television and multimedia company in Asia. It reaches more than 80 million households in 53 Asian countries.

The Taiwan-based Koos Group conglomerate controls more than 80 public and private enterprises in finance, telecommunications, and entertainment.

Reuters contributed to this report.

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