NEWS Corporation Ltd last night announced it had acquired a controlling stake of 63.6 per cent of HutchVision Ltd (BVI), the company which supplies all of STAR TV's programmes. The deal, which enables media magnate Rupert Murdoch to break into the region's fast-growing satellite television industry, involves payment of US$525 million (about HK$4.07 billion), half in cash and half in News Corp ordinary shares, to HutchVision's joint owners - Hutchison Whampoa and tycoon Li Ka-shing and his family. Hutchison and the Li family will jointly retain the remaining 36.4 per cent in HutchVision Ltd (BVI). The company is the producer, packager and marketer of the STAR TV service which is delivered to the licensee for transmission. A separate company, HutchVision Hongkong Ltd, is licensed by the Government to transmit the STAR TV service and will remain in the control of Hutchison and the Li family. The surprise announcement came after an earlier deal for News Corp to buy 22 per cent of Television Broadcasts Ltd (TVB) was withdrawn due to regulatory obstacles which restrict foreign ownership of any local television broadcaster to 15 per cent. A Government spokesman said last night that nothing in the regulatory framework prohibited the acquisition of News Corp's interest in HutchVision. TVB is regulated under the Television Ordinance, while STAR TV falls under the Telecommunication Ordinance. Local media industry people viewed the joint-venture as an important step which will shape Hongkong into the leading satellite broadcast centre of the region. The US$525 million paid by News Corp values HutchVision Ltd (BVI) at US$825 million. News Corp, which half owns the South China Morning Post and Wah Kiu Yat Po, will fund the purchase through an issue of convertible shares in the global media group. The deal represents a handsome return on what many observers believed was a gamble when STAR TV started broadcasting in April 1991. The value now put on HutchVision represents about six times the funds which Hutchison and the Li family have sunk into satellite television, according to a joint statement. For Hutchison Whampoa, the deal represents an extraordinary gain of HK$1.5 billion, which will silence critics of the investment put into the group, which was run by Mr Li's son, Richard Li Tzar-Kai. At the time of the launch, advertisers were reported to be wary of using STAR TV to sell their goods, and consultants predicted it would take about two years for advertising to get off the ground. The financial performance of HutchVision has never been stripped out of Hutchison Whampoa's annual figures. In his last annual statement to shareholders, Mr Li said that HutchVision had a successful year in 1992, and its penetration to 11.3 million homes in 38 countries was ahead of projections, but did not indicate whether it was yet in profits. The annual report revealed only that profits from retail, telecommunications, media and other services slumped 40 per cent to HK$238 million compared to 1991, but this figure would have included the heavy costs of the group's attempt to break into the UK telecommunications market. One of the criticisms of STAR TV by Hongkong analysts has been that its local programmes did not match up to those of TVB, controlled by Sir Run Run Shaw's interests. STAR's link with News Corp will benefit from its expertise in satellite services, through its 50 per cent ownership of BSkyB and the six channels it beams into Britain, and its ownership of Fox Broadcasting, which provides programmes for its own eight TVstations and 139 affiliated stations in the United States. It also owns Twentieth Century Fox, producer of some of the biggest blockbusters in cinema and TV history, and has a vast library of movies and TV programmes. ''The depth of the News Corporation's programme library and the company's financial strength will provide a solid foundation for the expansion of STAR's free-to-air and subscription services in the years to come,'' said the statement yesterday. STAR TV is believed to have negotiated a satellite deal which will give it much greater access to the global TV market. It already uses the AsiaSat 1 station, in which Hutchison has a 33 per cent stake, and is expected to be a leading customer for AsiaSat 2, due to be put in position on a Chinese Long March launcher in 1995. In addition, it is said to have invested in another project - the China-backed Apstar 2. If this deal is finalised, it would mean that the company's programmes could reach from Western Europe to Australia as well as most of Asia. News Corp is confident that such an internationally owned satellite service will bring many important benefits to Hongkong from stimulating the local independent production industry, to increasing investment and employment opportunities in high technology areas. In a statement issued late last night, News Corp's chairman and chief executive Mr Murdoch said he was very pleased that the Li family had retained a substantial holding in the company and was very excited about the expansion. ''The potential in Asia is enormous and it is obviously very exciting for News Corporation to be involved in STAR Television. ''We will build a business out of Asia as big as two BSkyBs,'' he said. Being the leading satellite broadcaster in the region, STAR operates channels providing news, sports, general entertainment and a Chinese-language programmes. Another channel, broadcast in Hindi, is beamed into India with more channels now in the pipeline. In a statement issued by Hutchison, the company believes the transaction represents an opportunity for the shareholders to realise a gain on their initial investment and reinforce the territory's emerging role as the region's leading broadcast centre. The technology director of News Corp, Peter Smith, said the transaction was not a sudden change of heart by the company, which had come close to signing a deal with TVB. ''TVB's deal became very difficult from a regulatory point of view. We saw a good opportunity with STAR TV so we took up on it. It was a very good thing,'' he said. Mr Smith agreed that TVB would remain dominant in the local broadcasting market but stressed that the News Corp-STAR TV partnership would tap the undeveloped Asian scene with massive opportunities in China. TVB was informed of the deal but there has not been an official response. The convenor of the Legislative Council's recreation and culture panel, Howard Young, welcomed the move as it provided a sound solution to a difficult legal hurdle. ''I welcome the company's sensible manoeuvring in a sense that it has come up with a solution that has prevented it from having to bend the law . . . But as to the benefits the partnership might offer, we have to wait and see,'' said Mr Young.