CONFIDENTIAL COMMERCIAL IN CONFIDENCE
157356
MDHIA 874
PARTICULARLY THE RULES ON FOREIGN OWNERSHIP. Í ENCOURAGED HIM TO GET
HIS EXPERTS TO MAKE CONTACT WITH OURS AS EARLY AS POSSIBLE.
5.
WE UNDERSTAND THAT THE NEGOTIATIONS WITH TVB ARE PROGRESSING
WELL AND THAT THEY ARE LIKELY TO PRODUCE AN AGREEMENT UNDER WHICH
SIR RUN RUN SHAW AND THE KWOKS WILL ADJUST THEIR HOLDINGS TO ALLOW NEWS CORPORATION TO TAKE A MAJOR STAKE (I.E. IN THE RANGE OF 20
PERCENT 33 PERCENT). THE MAIN ATTRACTION OF TVB IS NOT ITS HONG
KONG BROADCASTING RIGHTS BUT ITS STOCK OF CHINESE LANGUAGE PROGRAMME
MATERIAL AND ITS FILM-MAKING CAPACITY. IT SHOULD ALSO BE NOTED THAT
TVB HAS A POTENTIAL AUDIENCE IN CHINA OF OVER 60 MILLION. AS ELSEWHERE IN THE WORLD, THE EXPANSION IN THE NUMBER OF TELEVISION CHANNELS (CABLE, SATELLITE AND FREE-TO-AIR) HAS PUT A PREMIUM ON PROGRAMME MATERIAL. MURDOCH WILL FIND IT RELATIVELY EASY TO ACQUIRE
THE SATELLITE CAPACITY HE NEEDS BUT FINDING SUITABLE PROGRAMMES
WILL BE MORE DIFFICULT. TAKING A SUBSTANTIAL STAKE IN TVB IS ONE
WAY OF SECURING THE PROGRAMMING HE NEEDS, ALTHOUGH WHY HE THINKS IT NECESSARY TO BUY A STAKE IN THE COMPANY, RATHER THAN SIMPLY BUYING THE RIGHTS TO THE FILM LIBRARY, IS NOT CLEAR.
6.
WHAT IS CLEAR IS THAT NEWS OF THESE NEGOTIATIONS HAS LEAKED TO
THE STOCK MARKET. TVB SHARES WERE SUSPENDED AT NOON TODAY.
PATTEN
YYYY
DISTRIBUTION
33
MAIN
33
HKD
ECONOMIC ADVISERS
PS/PUS
SIR J COLES
ERD
MR HUM
NEWS D
PS/MR GOODLAD
NNNN