Wed, Nov 21, 2001 - Page 1 News List

STAR TV's Murdoch slams Taiwanese cable operators

By Tim Culpan  /  CONTRIBUTING REPORTER

James Murdoch, the chairman and CEO of Hong Kong-based STAR TV, yesterday delivered a scathing attack on Taiwan's cable TV operators, which he said threaten the industry as a whole.

Speaking at the 22nd Asian Advertising Congress (AdAsia 2001 Taipei), Murdoch described Taiwan's cable TV distributors as "thugs and thieves -- bandits on the super highway."

"Theft and resale of ad [space] coupled with the cartel-driven distribution model threatens the viability of broadcasters," he said. He also said that the potential for Asia's TV industry was threatened by short-sightedness and profiteering from within the industry, which includes ad-theft and under-reporting of subscriber numbers.

"Distributors must get their act together and start to operate legitimate businesses for the whole industry to be successful," he said.

The speech outlined the obstacles standing in the way of the Asian TV industry over the next few years and focused heavily on the Indian and Taiwanese markets.

South and Southeast Asia is in its infancy he said, "But you need only look at MSOs [multiple system operators] in the Philippines and India to see how pear-shaped it can all get.

Murdoch pointed the finger at overly-cautious bureaucracies and research-centric marketers for hampering the growth of the industry in Asia. But Murdoch saved most of his criticism for Taiwan's MSOs, which receive and package programming for distribution to the end user.

The Taiwan TV industry is controlled by two rival conglomerates, the Koos Group and the Rebar Group, which have carved up more than two-thirds of the market into separate spheres with no overlap.

Speaking at a luncheon at the AdAsia Congress on Monday, STAR president and COO Bruce Churchill called on the industry to stamp out ad-theft which plagues the industry. The theft takes place via ad-masking, the practice where local operators insert their own, locally-sold ads over the network ads. "The practice is short-sighted ... nowhere in the world is this more rampant than in Taiwan. We are now in the ludicrous position of having to buy back our own ad time," he said.

While STAR is criticizing the Taiwan cable industry, it is at the same time also lending Koos Group MSOs a total of US$200 million.

Despite the fact that local industry bites the hand that feeds it, Murdoch said the loans had no preconditions attached requiring Koos operators to stop stealing ad space from STAR. The deal, which was brokered by Koos-owned broadband ISP GigaMedia, was signed in October last year and is part of STAR's overall strategy to move into the Greater China market, and includes the rollout of interactive TV in Taiwan.

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