Copyright 2001 The New York Times Company

January 8, 2001

Entrepreneur Walking Fine Line at a News Channel for China

By MARK LANDLER

HONG KONG, Jan. 7 ó Ask Liu Chang Le whether he aspires to be the Ted Turner of China, and he laughs. But the analogy seems apt.

On Jan. 1, Mr. Liu's company, Phoenix Satellite Television, started the first 24-hour Chinese-language news channel, beamed from Hong Kong into mainland China by satellite. With its spartan resources and soaring ambitions, the Phoenix Info News channel looks and feels like a Chinese CNN.

Perhaps Mr. Liu finds the comparison to Mr. Turner droll because his partner is Rupert Murdoch, who helped start the original Phoenix Chinese Channel in 1996 and who is Mr. Turner's nemesis. More likely, Mr. Liu knows that life as a media baron in China is rather different than in Atlanta.

In 1999, the Chinese Channel came within an eyelash of losing its distribution, when the mainland authorities tried to clamp down on the illegal reception of foreign broadcast signals. It wriggled its way back into favor by covering NATO's errant bombing of the Chinese embassy in Belgrade with a patriotic fervor that surpassed even the hardest of hard-line Communist news organs.

"You have to strike a balance between freedom of the press and the market," said Mr. Liu, a large, cocksure man who was once a soldier in the People's Liberation Army and has worked as an announcer for the Central People's Radio Station.

The market in this case is both the Chinese television audience, which hungers for information, and the Chinese government, which regards certain kinds of information as a threat to national security.

For five years, Mr. Liu has walked a fine line ó offering the 42 million homes that can receive Phoenix an informative daily news program that does not offend Beijing. Now he must do it around the clock.

"It's a difficult task," said Yang Lan, a former program host at Phoenix who left to start her own television company. "The political risk is higher with news than with any other kind of programming."

Mr. Liu, 48, cultivates close ties to the leaders in Beijing. That and his years at a state-run radio station have given him a fingertip feel for the sensitivities of the government. Mr. Liu has developed a policy for juggling the hand grenades that the news occasionally presents.

"For something that is very, very sensitive, we may not say anything," he said. "But at least we will not lie."

That is hardly a credo in the tradition of Edward R. Murrow. But it is a step forward for China, where the official broadcaster, China Central Television, still functions as a propaganda arm of the government.

Each time he visits the United States, where he has two daughters in college, Mr. Liu said he is struck by the number of news channels on cable. One of those, Fox News, is owned by Mr. Murdoch, who is Mr. Liu's partner through the News Corporation's Asian satellite TV operation, Star.

Star and Mr. Liu began the Phoenix Chinese Channel as a joint venture in 1996. The company, which is based in Hong Kong, has since added a movie channel and Chinese-language channels aimed at Europe and North America, in addition to the news channel. Because Hong Kong is a separate legal jurisdiction from the mainland, Phoenix is considered a foreign broadcaster under Chinese law.

Today, Mr. Liu and Star each own 38.25 percent of Phoenix, though people at Star say Mr. Murdoch plays little role in it. The Bank of China owns 8.5 percent, while the remaining 15 percent is owned by the public.

Phoenix was listed on Hong Kong's equivalent of the Nasdaq last June. The stock has doubled in value since then, as investors have been beguiled by China's huge television market and the channel's fast-growing advertising revenue.

"Phoenix is really the only pure China play in the media business," said Andrew K. Collier, an analyst at Bear, Stearns in Hong Kong. "Advertisers also feel that it is a good way to reach the China market."

The flagship Phoenix Chinese Channel offers a frothy mix of movies, sports, game shows, news and documentaries. It favors attractive female on-air hosts, several of whom come from Taiwan.

One of its stars, Wu Xiaoli, became a celebrity in China in 1998 when she told Prime Minister Zhu Rongji at a news conference that he was her idol. Mainland journalists would never address their leaders in such a flip tone. But Mr. Zhu seemed tickled, replying that he was a fan of her program.

That bit of badinage cemented Phoenix's reputation as a channel that gets away with things. Mr. Liu has continued to test the limits of Beijing's tolerance. Last year, Phoenix covered the election in Taiwan, even though China played down the exercise in what it regards as a breakaway province.

Phoenix also carried the inauguration address of Taiwan's president, Chen Shui-bian. Beijing regards Mr. Chen, an erstwhile pro-independence leader, with such distaste that the state media do not mention his name.

Last week, Phoenix covered Mr. Chen's opening of direct trading links between the islands of Quemoy and Matsu and China. Taking their cue from Beijing, the mainland media largely ignored the announcement.

Yet Phoenix's boldness has limits. The channel has been sparing in its coverage of Falun Gong, the meditation sect that has been outlawed in China but whose members regularly protest in Tiananmen Square. Mr. Liu said Phoenix had assigned a reporter to "get inside" Falun Gong. But he said it was easy for news organizations to overdo coverage of the sect's activities.

"We have to consider that for people who don't believe in Falun Gong, they might find it really annoying," Mr. Liu said.

Having said that, he added that the channel would cover a conference of Falun Gong members in Hong Kong planned for Jan. 14.

The fine line that Phoenix must walk is underscored by the terminology it uses. The channel does not call its news programs "xinwen," the Chinese word for news. Instead it refers to them as information programs. Similarly, the new channel is called Info News, rather than simply news.

"They push the envelope," said an executive at Star, "but then to make up for it, they become more patriotic than Jiang Zemin when the situation demands it."

Politics aside, Mr. Liu's challenges are the same ones Mr. Turner faced in starting CNN two decades ago. He must build a global news network on a shoestring: $25 million in the first year. Phoenix has opened bureaus in eight cities, including New York, and has built an up-to-date studio in Hong Kong.

Mr. Liu must also figure out the programming mix. Initially, the channel will cover both general and business news. If it is successful, Mr. Liu said, he would spin off a separate CNBC-like channel.

First, though, Phoenix Info News must stand out in a cluttered and increasingly sophisticated Chinese market. Even the successful Chinese Channel has struggled to gain ratings. Despite its potential audience of 42 million homes, the channel's actual ratings are far lower, perhaps no more than 250,000 homes. New domestic stations could erode those already-modest numbers.

And Phoenix is still vulnerable to being removed from the air. Under Chinese law, cable operators are not allowed to retransmit foreign satellite signals. That is how most viewers receive Phoenix. Though analysts think Mr. Liu's political connections will protect him, he is operating in a gray area.

Despite all this, Mr. Liu brims with confidence. He contends that it would be hard to shut Phoenix down even if Beijing were so inclined. He notes that unlike the early CNN, Phoenix is an established brand in China. That means it has anchors, reporters and news crews on its staff who can do double duty.

"When Ted Turner started CNN, he had to start from scratch," Mr. Liu said. "We're making two dishes out of the same chicken."