THE Government has stepped in to mediate between Wharf Cable and STAR TV to help resolve the issue of which STAR channels should be broadcast on the newly-launched Wharf network. ''My office is now mediating between the two companies,'' said Secretary of Recreation and Culture James So Yiu-cho, adding he hoped the matter would be resolved ''within days and not weeks''. ''Clearly they don't want to enter into a cut-throat competition, and we don't want them to enter into a cut-throat competition, because it would not benefit the consumer.'' When Wharf Cable launched its pay-TV service on Sunday afternoon, it broadcast only its own eight channels, refusing to show the seven STAR channels that were part of its original brief until negotiations between the stations were resolved. However, Mr So said his department's ability to impose any penalties on Wharf Cable for not fulfilling its part of the licence agreement was dependent on technical issues. ''You have got to look back at the original government policy. When STAR is prepared to go regional on its subscriber service then the Hong Kong part of that service must be carried by Wharf,'' he said. ''The part that is crucial is that [STAR TV] has the capability of sending the signals up in an encrypted form.'' Only if STAR could prove it was ready to launch a satellite pay-TV service, and Wharf still refused to broadcast STAR's three free-to-air channels - MTV, Prime Sports and BBC Asia - and four premium channels would the Government be able to impose the maximum performance bond penalty of $50 million. ''At the moment it is a kind of gentleman's agreement between the two companies,'' he said. Meanwhile, STAR TV's four premium channels - English Movies, Asian Movies, Children's Channel and Asian News and Business Channel - have been up and running since Sunday, with Wharf technicians the only people outside STAR's Clearwater Bay studios who can see the programmes. However, industry sources suggested that, while the programmes might be running on schedule, there was a shortage of transponders on satellites, with STAR TV possibly having to wait until the launch of AsiaSat 2 next year before they had the option of sending up a scrambled signal. The company denied there was a problem. ''This is not a transponder issue,'' insisted corporate communications manager Douglas Gautier, who confirmed that negotiations had been going on yesterday and over the weekend with Wharf officials. He denied that STAR executives had boycotted the Wharf launch party in protest at the cable company's refusal to show their programmes. CNN expects to have its first Asian production centre up and running in Hong Kong by the end of next year, the president of the US-based satellite broadcaster said yesterday. Tom Johnson said the centre would be responsible for ''pulling together'' CNN's coverage in the region.