AOL INC. (AOL)

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AOL Time Warner Inks Landmark Deal

AOL Announces Landmark Deal With China Making It First Foreign Broadcaster in the Country

By JOE McDONALD
Associated Press Writer
BEIJING (AP) -- AOL Time Warner Inc. [NYSE:AOL - news] is taking Chinese state television into American homes in a deal announced Monday that makes the company the first foreign broadcaster given direct access to Chinese audiences.

The exchange lets AOL Time Warner break into a fast-changing Chinese market where nearly every home owns a television and viewers number in the hundreds of millions.

Communist authorities regard television as a key propaganda tool and carefully control it, though millions of Chinese watch television from abroad with illegal satellite dishes. Officials appeared to be willing to relax restrictions slightly in exchange for access to American audiences.

AOL Time Warner said broadcasts of its Chinese-language CETV channel would be begin next year on cable systems in Guangdong province, a prosperous part of China's southeast.

CETV's programming is a mix of Chinese entertainment shows, cartoons, game shows, movies and sports. It also carries versions of some U.S. shows like ``Miami Vice' and the cartoon ``Johnny Bravo' dubbed into Chinese. AOL bought the six-year-old channel last year and relaunched it in February.

It will be the first time that a foreign broadcaster reaches Chinese audiences with the government's approval. CETV, based in Hong Kong, already is seen in Taiwan, Singapore and elsewhere in Asia.

In exchange, China Central Television's English-language Channel 9 will be carried by Time Warner cable systems in New York City, Los Angeles and Houston, said Tricia Primrose, a spokeswoman for the company in New York.

No financial details of the deal were released.

China's huge audience and potential advertising market have attracted interest from other foreign broadcasters. Rupert Murdoch's News Corp. is trying to land a deal similar to AOL's.

Gerald Levin, AOL Time Warner's chief executive, said in a prepared statement that the deal was a ``significant step in the growing relationship between AOL Time Warner and the people of China.'

Zhao Huayong, president of China Central Television, said in a statement that the deal was a ``milestone, which has turned a new page in China's TV industry.'

AOL Time Warner relies heavily on the U.S. market for its media businesses -- which include Time magazine, HBO, CNN, AOL and the Warner Bros. film and music studio -- and it has been stepping up its efforts to expand overseas.

``There are any number of U.S. broadcasting entities who would like to enter that market, and it's all a question of how to overcome the various political hurdles,' said Rob Martin, media anlayst for Friedman, Billings, Ramsey Group, a brokerage based in Arlington, Va. ``AOL seems to be in a good position to do that given its size.'

The programming that American audiences will see on CCTV-9 resembles a slower, less adventurous version of U.S. educational television, with a mix of news, music and cooking shows, documentaries on nature and travel, Chinese lessons and sports.

Chinese broadcasting officials express hope that showing it in the United States will change American attitudes about China. CCTV-9 is the only English language channel put out by China's state broadcaster.

Yet CCTV-9 may have difficulty competing for attention with scores of American cable channels. Its programs can be interesting -- especially nature and travel documentaries -- but production quality is uneven and shows are staid compared with U.S. television.

The exchange gives AOL Time Warner access to one of the most affluent areas in China.

The channel is to be carried on cable systems in the Pearl River Delta northwest of Hong Kong, said Tricia Primrose, an AOL Time Warner spokeswoman. She said she didn't know how many households those systems serve.

Viewers there already can watch television from neighboring Hong Kong. The former British colony is not covered by central government censorship, and its television stations are livelier -- and their news reporting more aggressive -- than state-run mainland media.

Primrose said the channel carries no news programs. She had no details on whether the agreement includes provisions for Chinese censorship of CETV programming.

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