News

News Corp.s S. Korea DTH Plan Faces Hurdles

2/22/1998 7:00 PM Eastern

News Corp. chairman Rupert Murdoch has set his sights on
South Korea's direct-to-home television market, but his plans to become the
country's first DTH provider face a number of obstacles.

For starters, South Korea has no legal framework to
regulate a DTH system. Draft legislation has been sitting in front of legislators for the
last two years. A spokeswoman with News Corp.-owned Star TV in Hong Kong said the company
did not know when it would be passed.

Dacom Corp., a South Korean telecommunications company and
Murdoch's partner in the proposed project, also conceded that there are problems with
creating a legal standing for DTH. 'The current law applies only to TV stations and
cable networks. We need additional rules on new media,' a spokesman said.

Murdoch signed the joint-venture agreement for a digital
DTH operation with Dacom during a visit to Seoul, South Korea, earlier this month. The
project, for which no launch date was set, carries an estimated price tag of $US62
million. According to the agreement, Murdoch and Dacom's subsidiary, Dacom Satellite
Multimedia System (DSM), will form a domestic consortium to build a locally based DTH
service.

One ray of hope for News on the regulatory front came in
comments by South Korea's president-elect, Kim Dae-jong, who met with Murdoch after
the deal was signed. 'I think that an entry into my country by a prominent media
entrepreneur, like chairman Murdoch, will give a lot of impetus to the domestic media
market's development,' Kim said.

Still, News and DSM may also face considerable opposition
by the Korean Cable TV Association. The KCTA has repeatedly said that DTH should not be
permitted until the nationwide cable TV network has 2 million subscribers. Launched in
March 1995, cable currently has between 1.4 million and 1.7 million subscribers. The 2
million-subscriber figure is widely thought to be the breakeven point for cable TV. There
are 9 million TV households in the country.

There are indications that foreign investors will be able
to own up to 15 percent of South Korean cable TV operators in the future. This limit is
contained in the provisions in the country's proposed regulations covering
satellite-delivered TV, but it is very unclear if this limit will actually apply when and
if the legislation becomes law.

Foreign satellite signals cannot be relayed directly into
Korean homes, either through dishes or cable TV channels, although in practice, cable
operators are known to do so because of a lack of local programming.

September