News Corp. Partners with Private Equity for China Assets

SHANGHAI: News Corporation is selling a controlling stake in its STAR China business—which includes the Xing Kong channel, as well as the Fortune Star library—to China Media Capital (CMC), a government-backed private-equity fund.

CMC, China’s first private-equity fund focused on the media business, will acquire a controlling stake in Xing Kong, Xing Kong International, Channel [V] Mainland China and the Fortune Star Chinese movie library of 750-plus titles for an undisclosed sum. This is CMC’s first investment since its April 2009 formation with the backing of the National Development and Reform Commission. Under its new owners, the STAR China assets will continue to be led by Jack Gao, currently a VP of News Corporation and CEO of STAR China.

“This partnership is an extension of our long-term cooperation with News Corporation," said Li Ruigang, chairman of China Media Capital (and head of Shanghai Media Group, one of CMC’s founding partners). "The entry of Chinese capital into international media market will help facilitate its changes and development. Today’s agreement represents a first step into that direction. CMC will continue our efforts in developing operational and investment platforms for international media. ”

James Murdoch, chairman and chief executive for Europe and Asia at News Corporation, said: “The agreement with CMC recognizes the value we have created in STAR China and enables us to continue to grow it for the future."

Reports indicate that News Corp. will retain close to 50 percent of the China venture. Financial were not disclosed.