News Corp. confirms STAR TV breakup

HK-based group to go regional, merged with Fox Channels

HONG KONG -- Some 30% of staff in Hong Kong will leave STAR TV as a result of News Corp.'s reshuffling of its broadcast businesses in Asia.

The announcement made Tuesday by James Murdoch, News Corp.'s chairman and CEO in Europe and Asia, confirmed previous reports that the conglomerate will dismantle STAR's Asian regional business that has been based in Hong Kong since 1991.

STAR's CEO Paul Aiello is exiting as part of the breakup and will quit the company in December after a hand over period. COO Laureen Ong's departure this month was announced in July.

The group will be replaced by two local clusters -- STAR India and STAR Greater China -- and a channel management business that is merged into the existing Fox International Channels business in Asia.

"The changes will take place over the next year, with much being accomplished by the end of this fiscal year," said Murdoch in a letter to staff seen by The Hollywood Reporter. "As STAR India and STAR Greater China add capabilities, our operations in Hong Kong will get smaller, with a reduction of 30% expected by June." STAR currently employs approximately 500 in Hong Kong.

While a staff evaluation process will proceed over the next ten months to June 2010, some personnel were laid off with immediate effect. Most are in Hong Kong-based regional service roles.

News Corp. says the sweeping changes will improve operating efficiency by moving resources closer to viewers, increasing scale and flexibility for advertisers and affiliates.

"We are now reshaping a big, regional organization into three highly focused business units, each of which will be intensely competitive in its target marketplace. While it was once natural to have a larger, regional headquarters, the company has now reached a scale in its key local markets where we are ready to empower the teams on the ground and move a number of functions to be closer to viewers," the company said in a statement.

The conglomerate will, however, also open a small new corporate office in Hong Kong to manage News Corp. group communications and handle legal and government affairs in the region. It will also manage joint ventures that include Singapore-based ESPN STAR Sports and Indonesia's ANTV.

The seven Indian joint ventures will fall under the control of the beefed up STAR India and its CEO Uday Shankar, who now reports directly to James Murdoch. The Indian operation will manage sales and distribution of the company's 19 local channels and additionally take over responsibility for managing the sales and distribution of all FOX-branded channels in India.

John Lau, currently STAR's president, China and Taiwan, STAR, will remain based in Hong Kong and now report directly to Murdoch, as head of STAR Greater China. The unit's content and broadcast businesses include a bouquet of Chinese language channels, (Star Chinese Channel, Xing Kong, Star Chinese Movies, Star Chinese Movies 2 and Channel [V]), the Fortune STAR movie library and joint ventures Phoenix television and Fox STAR Studios new Chinese film production business.

Jack Gao, CEO of STAR China, and Daniel Cheung, CEO of STAR Taiwan, will continue their operational leadership roles in their respective markets.

The Fox International Channels business which already has its Asian HQ in Hong Kong will become responsible for the English-language channels (Star World, Star Movies and Channel [V] International) previously managed by STAR outside India. These will now be combined with the Fox and National Geographic Channel brands giving Ward Platt, FIC president in Asia and Zubin Gandevia, COO -- Asia 37 channels under 17 channel brands. Platt will report to David Haslingden, CEO, Fox International Channels and National Geographic Channels Worldwide.

"The combination of STAR and FOX International Channels will create a streamlined structure, resulting in a more efficient cost base for the operation of regional channel distribution in the consolidated business. It also provides a platform for FIC to expand its high-definition portfolio in Asia from the current four brands to eight or more next year," the company said in a statement.

"In February of this year, my father (Rupert Murdoch) wrote to the whole company saying that it was rare to face an environment so fraught with difficulty yet so full of opportunity. He reminded us that we must renew our focus on large opportunities and prepare for change. It is in this context that we seek to build truly special businesses in STAR India, STAR Greater China and Fox International Channels," said James Murdoch in his address to staff.

"(The restructuring) reinforces STAR India's leading position at a time when India is exploding with opportunity. It creates a clear focus for our business in Greater China and it gives Fox International Channels greater scale which makes it the new number one in the region.

Murdoch thanked Aiello for his efforts, especially in India, which has been expanded with a mesh of joint ventures DTH operator Tata Sky; cable system Hathway; channel distributor STAR Den; news channel operator MCCS; south Indian broadcast businesses Asianet channels and STAR Vijay; film producer and distributor Fox STAR Studios India and STAR CJ Home Shopping.
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