Star to undergo restructure

News Corp. businesses to cut jobs in overlap reduction

HONG KONG -- News Corp. is planning a major restructure of Star, its Asian TV entertainment business based in Hong Kong.

The revamp of the Rupert Murdoch-owned satcaster is not just a response to the global recession but a corporate streamlining move inspired by Fox International Channels boss David Haslingden and News Corp.'s European and Asian boss James Murdoch, who five years ago occupied a corner office at Star's glitzy Hong Kong offices.

Together, they plan to eliminate overlap between Star and FIC, which can be seen as parallel entities competing for eyeballs, advertising and overhead.

Star packages 60 own-branded regional and national channels in 13 Asian languages and claims to broadcast to 53 Asian countries. Beyond Hong Kong, it has offices in India, Taiwan, mainland China, Southeast Asia, the Middle East, the U.S. and the U.K.

FIC, whose Asian regional headquarters sits within the same Harbourfront offices as Star, distributes global branded channels including National Geographic as well as smaller networks FX, Fox Crime and Fox Life. It licenses History Channel from A&E Television Networks in Italy.

As part of the restructuring, Star COO Laureen Ong, who was appointed slightly more than two years ago, has been effectively pink-slipped, though her contract runs through next year. The 13-year News Corp. veteran remains on hand to advise on the transition. There almost certainly will be more layoffs at Star.

In March, News Corp. combined its U.S. film and television production operations into one unit and put all its U.S. TV networks under Tony Vinciquerra.

"By removing barriers between businesses, this restructuring will enable us to better share ideas and resources," Rupert Murdoch said at the time.

There have been further management realignments at News Corp. stateside as a result of Peter Chernin's exit as president and COO at the end of June and the hiring of Chase Carey to fill those roles and assume the deputy chairman title.

The revamp suggests that management of national channels will be devolved to smaller structures in their target markets. In particular, operations in India and Greater China might be repackaged as locally managed clusters that are closer to their audiences.

Management of regional English-language channels may be integrated with that of FIC, with oversight of Star Movies and Star World likely to be the thorniest issues. Fox Movies, which FIC handles in some territories, is not distributed in most of Star's region.

Star, unlike its European counterpart BSkyB, does not have a separate share quote, and its figures are consolidated into those of News Corp. However, industry estimates point to operating income of $75 million in 2007-08. That is understood to have fallen in the fiscal year ended in June. In addition to the global financial collapse, Star has been hit by the plunging advertising market and competitive challenges in India and investment in new regional channels, also especially in India.

A Star spokesman offered no comment on the shakeup but confirmed an ongoing "business review." FIC also declined comment.

One Star insider, however, conceded that the restructure will affect head count -- "after all, we are not running a charity" -- but he and other insiders said they could not provide details because the review process is ongoing. One scenario is to put everything into FIC, but there are other alternatives being discussed.

While Ong, an FIC alumna who once headed National Geographic Channel in the U.S., is understood to have sought an alignment of the Star and FIC operations, one source described the current process as "integration, but with Fox in charge."

"There is going to be a massive change in the philosophy of the business," said another.

Details might be thrashed out this week during a series of internal meetings involving top management flown in from Taiwan, China, India and elsewhere.

It is not clear how much the restructuring will affect Star's 10 joint ventures, which range from a 50% stake in Singapore-based ESPN Star Sport (co-owned with Disney) to minority stakes in local cable systems, 20% of an Indian DTH platform and an Indian channel distributor.

Star also has minority holdings in channels including Channel V Thailand; ANTV in Indonesia; and Phoenix, a Mandarin-language news and entertainment group based in Hong Kong. In Fortune Star, it owns one of the world's biggest Chinese-language film libraries.
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