text: Rupert Murdoch’s News Corp is to sell control of its three Chinese television channels to a local state-controlled private equity fund in a recognition that its ambitious plan to build and control a broadcasting business in China has failed. 
   
   The sale is the most decisive step so far in what has been a gradual retreat by News Corp over the past four years from a media market where the government insists on maintaining tight controls. 
   
   China Media Capital, a fund backed by Shanghai Media Group and China Development Bank, both state-owned, has agreed to acquire a controlling stake in Xing Kong, Xing Kong International, Channel [V] Mainland China and its Fortune Start Chinese film library, News Corp and CMC said. 
   
   The sale comes a year after News Corp reorganised its pan-Asia Star TV business into separate Star India and Star Greater China units, and also ceded management of Star’s English-language content to Fox International Channels. 
   
   “They unemotionally realise that their media business there has the best opportunity to grow and profit in the control of local hands – from a regulatory and commercial perspective,” said Vivek Couto, executive director at Media Partners Asia. 
   
   An industry executive said: “James Murdoch [Mr Murdoch’s son] doesn’t believe that they can build a business in China – this is a clear sign that they aren’t interested in China any more, but they can’t say that.” 
   
   Analysts said CMC’s main interest was in gaining access to the overseas distribution channels that could help Chinese media groups internationalise. 
   
   Beijing is seeking to make its media industry more commercially viable while retaining political control by building select groups into companies that could project China’s voice outside of the country. 
   
   The deal with News Corp fits that policy, as it includes the Fortune library and its globally popular content, such as Jackie Chan movies and access to Xing Kong International which broadcasts in Hong Kong and Singapore. 
   
   The two companies did not announce financial details of the deal but executives said News Corp would hold on to close to 50 per cent of the assets. 
   
   The combined assets of the three channels and the film library are valued at $300m, making the deal worth about $160m, sources said. ||||| By Nick Clark 
   
   
   
   Rupert Murdoch has sold a majority stake in three of his Chinese TV channels to a private equity fund backed by the government in Beijing. 
   
   The decision marks a shift in News Corporation's strategy in the country and fuelled speculation yesterday that the media mogul could retreat from China, where his company has struggled to break through despite a long-standing commitment to the market. 
   
   News Corp announced yesterday that it had agreed to sell a controlling stake in the television assets to China Media Capital (CMC), the country's first buyout fund specifically focused on the media industry. The terms of the deal were not disclosed. 
   
   News Corp said it would retain "a significant stake" in the business but the company would not reveal how much. It added: "Both partners aim to develop the business by exploring new growth opportunities." 
   
   Mr Murdoch's decision to cede full control prompted speculation that News Corp has become frustrated with the control the Chinese authorities continue to exert on the country's media, despite encouraging commercialisation. There have also been suggestions that Mr Murdoch's son James, an increasingly powerful force within the company, is not convinced that News Corp's efforts in China will bear fruit in the near future. 
   
   However, insiders at the business rejected suggestions that the sale of the TV stakes signalled News Corp's retreat from China. Alongside the remaining holding in its Star TV business, News Corp also has a 17.6 per cent holding in Phoenix Satellite Television, which runs three channels, as well as the Chinese operations of subsidiaries Dow Jones and MySpace. One possibility is that partnering with local state-owned operators may accelerate its expansion. A source close to News Corp said the move would help "open up the region". 
   
   Jack Gao, the chief executive of Star China, will take over as head of the joint venture, which will be based in Beijing, and have offices in Shanghai, Hong Kong, Guangzhou and Chongqing. The company's entire staff of 70 is moving with him. 
   
   James Murdoch, who is chairman and chief executive of News Corp in Europe and Asia, said: "The agreement with CMC recognises the value we have created in Star China and enables us to continue to grow it for the future." 
   
   Rupert Murdoch bought Star TV in 1993 and has been forced to make a series of concessions to the Chinese government, including barring the BBC from his satellite platform broadcasting in the region. 
   
   The state has consistently turned down his requests to make and broadcast programmes in the country. 
   
   Mr Murdoch has recently expressed frustration about his operations in China. In October last year, he gave an address in the country calling for a more open media industry. 
   
   A year ago, he restructured News Corp's Asian business, getting rid of almost a third of the company's staff in Hong Kong to focus on the Indian market. At the time, 75 per cent of Star TV sales came from India. 
   
   Yesterday's deal will see CMC take control of News Corp's two general entertainment channels, Xing Kong and Xing Kong International, as well as Channel Mainland China, a music channel aimed at young people. The move also includes the Fortune Star Chinese movie library, which has a total of 757 Chinese-language titles. 
   
   Li Ruigang, chairman of CMC, said: "This is an extension of our long-term co-operation with News Corporation."
target: – Rupert Murdoch's News Corp. stepped up its retreat from China yesterday with the sale of a controlling interest in three TV channels to a government-backed fund. The company insists that it plans to maintain a strong presence in China but analysts believe the move signals that News Corp., frustrated by interference from Beijing, has finally given up on its hopes of building a broadcasting business in the country, the Independent reports. News Corp. Asia and Europe CEO James Murdoch, Rupert's son, "doesn’t believe that they can build a business in China," an industry executive tells the Financial Times. "This is a clear sign that they aren’t interested in China anymore, but they can’t say that.”