AsiaSat set to merge with APT

ASIASAT, the satellite company that beams STAR TV's signal, is set to merge with its mainland rivals APT Satellite in a union likely to dominate the region's TV industry.

Sources said last week that talks between the two companies had reached a critical stage after two months of confidential discussions.

If a deal can be reached the two companies could be in a position to dominate the burgeoning Asian satellite TV signals distribution market over the next few years, with both companies set to launch powerful satellites over the next 18 months.

It would also go much of the way towards resolving the ill-feeling that has soured the relationship between AsiaSat and one of its three joint owners, Hutchison Whampoa.

Until two-thirds of STAR TV was sold to Rupert Murdoch's News Corporation it was jointly owned by Hutchison Whampoa and a family company run by chairman Li Ka-shing.

In May STAR TV signed a deal with the China-led APT to lease 20 transponders, or signal distributor/receivers on the APStar 2 satellite, due for launch in early 1995.

This was in apparent contravention of STAR TV's undertaking not to invest in rival satellite operations, and there were reports the AsiaSat board were considering legal action against another company under the same corporate umbrella.

This STAR TV/APStar link would probably end the possibility of an embarrassing court case.

Of rather more importance is how a possible AsiaSat/APStar merger would give the new company an unprecedented area of coverage in the world's most buoyant satellite television market.

STAR TV announced earlier this year it had reserved eight transponders on AsiaSat 2, reportedly giving it exclusive use of the satellite when it comes to beaming a signal over the entire footprint, or broadcast area - the same privilege it has with AsiaSat 1.

In addition to the 38 countries already reached by AsiaSat 1, the company's AsiaSat 2 satellite will reach across India, the Middle East, into Western Europe, as far south as Australia, over all of China and over to Japan.

The APStar 2 satellite will reach roughly the same area, allowing the merged company exclusive use of three satellites, with a commensurate savings in overheads and plenty of backup if anything went wrong, according to one source.

The US$438 million (about HK$3.4 billion) losses sustained in just two years by the Japanese JSB company indicates the potential for loss-making in the field, although AsiaSat 1, a secondhand satellite launched in an untapped market is conservatively setto earn over US$250 million by the end of its life in 2000.

Peter Jackson, the recently appointed CEO for AsiaSat, which is also owned by Cable and Wireless and China International Trust and Investment Corp, said: ''I don't feel I can usefully comment in any way about any talks about a merger.'' APStar's management was not available for comment.

If the merger is successful, it will call into question the deal struck by STAR TV's programming rivals, the so-called ''gang of five'' - CNN, Home Box Office, ESPN sports network, Australian Television International and TVB's ''Superstation'' - who havebooked a total of 16 transponders on APStar 1, due for launch next summer.

Although the link between STAR TV and AsiaSat is no longer as close since the News Corp deal, the five will be anxious to discover in detail how they would be affected by the tie-up with their main competitors for viewers and advertising.

APT Satellite was formed last year by three mainland Chinese firms: China Telecommunications Broadcast Satellite Co Ltd (the Ministry of Posts and Telecommunications), Ever-Victory System Co (the aerospace ministry) and China Yuan Wang Group Co (with close connections to the Chinese military), plus Chia Tai International Telecommunications Co Ltd, a subsidiary of a Thai-controlled conglomerate based in Hong Kong.

APT Satellite has also reportedly been joined by two other investors: a Singapore Telecom-related company and Macau Travel Investment, a telecommunications firm said to be associated with the Portuguese enclave's gambling supremo, Stanley Ho.

Each of the six APT shareholders is reported to have invested US$10 million in the project. A Taiwanese company has also long been expected to join the consortium.