STAR's $4b invitation for pan-Asia network

IN THE end, it came down to an ''invitation only'' bidding war for STAR TV, despite a series of vehement denials by Richard Li that the station was for sale.

Those denials, which have now been proven false, dated back to at least the beginning of this year, and were repeated by Mr Li just days before the final News Corp deal was announced.

It is known that the Pearson Plc group (owner of the London Financial Times and London's Thames Television) was one of the bidders, but the other two remain unnamed.

However, it seems that the two were London-based organisations with strong British affiliations.

Another likely player would seem to be Carlton Communications, led by Michael Green. On a number of occasions, Carlton had said it was interested in a major Asian acquisition.

Other contenders are thought to have been maverick Anglo-French financier Sir Jimmy Goldsmith and Australia's richest man and a long-time rival of Mr Murdoch, Kerry Packer.

In the end, Li almost signed with Pearson for much the same stake that eventually came from News Corp.

Pearson is reported to have been willing to offer ''substantially more'' than News Corp for two-thirds of the shareholding in STAR TV, but dithered and lost out to a fast-moving News Corp team.

The main reason for a road block in the negotiations with Pearson was a failure by the British group to give an undertaking to place an issue of STAR TV equity on the open market, either in Hong Kong or in the United States, or both.

It is believed Mr Murdoch agreed to such a float, in principle, at a future date and that the Lis would be able to sell their stake when they saw fit.

Another plus for the News Corp deal was an assurance that if it did not come to an agreement with STAR TV, it would go head-to-head with the Asian broadcaster.

With Mr Murdoch being the most credible opposition to date, this was a serious threat.

The Li family and Hutchison retain a 36.4 per cent holding in the pan-Asian broadcaster, and obtain 2.7 per cent of News Corp.

The rest of the purchase price for the station, which broadcasts to 38 countries and claims 45 million viewers, will be paid in cash.

It was also revealed this week that STAR TV's acquisition arm, Media Assets, a separate company, also owned by the Li family and Hutchison, had been sold to HutchVision BVI for US$64 million.

News of the takeover of HutchVision was greeted as a brilliant move, engineered by Richard Li.

It was also characterised as a good buy for News Corp, which, for the past three years, has been restricted in its financial movements by restructuring predicated by a debt mountain of A$10 billion (HK$52.7 billion) The latest deal allows News Corp to buy into STAR TV only a couple of months after talks were aborted between the two parties, when a Murdoch bid of US$250 million for 40 per cent of the station failed to get News Corp control.

The final takeover announcement came as a surprise, since, following the failure of the original STAR TV talks, News Corp had only just made a play for a stake in TVB.

That bid, which was for 22 per cent of TVB at a cost of US$240, stumbled following a public outcry and questions by regulators over such a substantial holding by a foreign entity.

In the event, News Corp withdrew its offer, saying it was rethinking its strategy.

But News Corp clearly believes it may yet come to an agreement with Sir Run Run Shaw's TVB and gain access to the 100,000 hours of Chinese programming.

That interest in obtaining an agreement with TVB might explain Mr Murdoch's 63.6 per cent holding in STAR TV, which could seem high for a man who often settles for just over 50 per cent of any venture he is interested in.

If Mr Murdoch wanted to sell-on 10 per cent of STAR TV, it would be permissible for him to do so to TVB. That would not breach any Hong Kong cross-ownership broadcasting rules.

Serious questions, however, remain unanswered regarding the future of STAR TV.

Not the least of the unknowns is whether a series of Memorandums of Understanding with US programmers will stand the heat of the takeover.

But, according to young Mr Li, the freshly installed News Corp regime is free to renege on these agreements, if it so wishes.