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Media Baron


Entertainment: BROADCASTING

MEDIA BARON

Ananda Krishnan is out to make Malaysia a powerhouse from India to Taiwan

It's an easy call. The music video that has just come in from MTV is called "Get Horny" and features a rapper in black leather. He's surrounded by a gaggle of gyrating, leggy women in black tights. To top it off, they've got handcuffs. That's more than enough for the editors in the content-control room of Astro, Malaysia's new direct-broadcast satellite-TV service. "Coupling violence and sex together. That's just absolutely verboten," says Graham Stephens, director of broadcast and production operations and one of about 50 foreign employees. "Get Horny" gets the ax.

Twenty-four hours a day, the censors monitor MTV and a half-dozen other Western channels, such as HBO, NBC, and ESPN, ferreting out offensive parts before letting the programming air in Malaysia. Astro plays a critical role as a government-sanctioned guardian of Malaysian morals, but it's much more than that. Astro is at the core of what is probably the most ambitious media effort under way in the region. Overseeing it is 58-year-old T. Ananda Krishnan, an oil tycoon and real estate developer with an estimated net worth of more than $1 billion. He wants to create, from scratch, a new business empire and a showcase for the government of Malaysia.

It's an incredibly daring venture: Krishnan envisions a powerhouse network of satellites, digital television, telecommunications, original film-and-television programming in Malaysian, Chinese, and Tamil, even online banking and gambling by phone. The goal: to have millions of customers from Taiwan to India. "There's definitely something to [being] regarded as Asia-friendly," says Krishnan.

This effort would be daunting for even a seasoned media company. But this is new territory for Malaysians, who have long settled for a handful of television stations. And there is serious competition. Rupert Murdoch's News Corp. wants to dominate satellite broadcasting in Asia through Star TV. Other regional moguls, such as Thailand's Sondi Limthongkul, are moving beyond their borders to new markets.

Yet Krishnan has a powerful ally: the Malaysian government. With their huge scope and technological sophistication, Krishnan's media ventures are key to Prime Minister Mahathir Mohamad's vision of building a fully developed nation by 2020. The government-run investment company Khazanah Nasional bought a 15% stake in Astro last year for $260 million. Regulators have also steadily awarded Krishnan's companies key licenses in such areas as telecommunications, satellites, and gambling. "The government is going to support them no matter what," says one envious Western industry executive. "It's a prestige thing."

BEST OF THE WEST. It's also a cultural thing. Krishnan clearly intends to provide Asian alternatives to the Western media offensive. "Asia is not going to sit down and lap up U.S. programming," says Krishnan. Thus, Krishnan's live-action and animation studios in Malaysia, the Philippines, and Vietnam are working overtime to produce shows morally acceptable to conservative Asian audiences. And by censoring MTV and others, Krishnan wants to allay the Malaysian government's fears that more access to world media will corrupt Malaysian values.

Krishnan is certainly not spurning all things Western. Technology from the West was essential in developing Astro, a four-month-old digital service owned by Measat Broadcast Network Systems that allows consumers with special satellite dishes and decoder boxes to receive 20 channels (table, page 202N). By next year, Krishnan's companies also aim to introduce, through a U.S. subsidiary, banking, stock-trading, home-shopping, and Web-surfing technology for the Astro system. And at Krishnan's telecom operations, many senior executives come from partner U S West.

The sheer scope of his efforts has put the spotlight on Krishnan, who built his fortune largely in the oil business. (The name of his holding company, Usaha Tegas, is Malaysian for "Firm Effort.") In a country where most of the elite is Malay or Chinese, Krishnan is third-generation Sri Lankan Tamil, a tiny minority, and he has kept a low profile. Yet he has built important friendships with such political leaders as Prime Minister Mahathir. "He has the trust of the nation's trustees," says a Western securities analyst in Kuala Lumpur.

A graduate of Harvard business school, Krishnan knows enough about his different businesses to grill employees on bandwidth or game shows. He also makes some special demands. An avid reader of everything from Noam Chomsky's linguistic theory to the history of the Spanish Inquisition, Krishnan sometimes has employees visiting the U.S. bring back dozens of books for him. "He is in many ways a Renaissance man," says American International Group Inc. Chairman Maurice R. Greenberg, who calls Krishnan a "very creative business executive."

Astro's initial performance has impressed many in the industry, grabbing some 43,000 subscribers since it started four months ago. But the service is expensive, with a high installation cost of $650 and a monthly fee of $34, so some doubt that Astro can reach its goal of 700,000 homes by 2000 out of a total 5 million households. To do so would mean revenue of $650 million a year from the TV service. Krishnan says skeptics underestimate income levels in Malaysia. And the price should come down when Philips Electronics, which supplies the decoder box, begins local production.

Even if Krishnan finds smooth sailing inside Malaysia, the going may be far rougher outside. From the two Measat satellites, the group wants to form joint ventures to beam direct-to-home TV and radio to India, Taiwan, the Philippines, and Indonesia. But having seen the success of DirecTV in the U.S. and BSkyB in Britain, others in Asia have the same idea. For instance, Star TV, which is losing millions in its startup phase, is developing direct-to-home ventures in Indonesia and India.

Astro executives say they have an edge since they are already up and running, and they will emphasize programming produced in Asia. "The scramble now is for content, because there is so much crap out there," says Marcel Fenez, a partner at the entertainment, media, and communications group of Price Waterhouse in Hong Kong. Astro's plan is to be sensitive to local political and cultural issues. "It's not good enough to take a lot of programming from the West," says Measat's Chief Operating Officer Paul Edwards, a former Star TV executive vice-president.

HOME GROWN. Productions have included a special for the end of Ramadan, in which Malay actors reenacted scenes from famous old Malay movies. There's a Malay-language Wheel of Fortune and various variety shows, including one for MTV Asia called Lip Service. From its seven studios, Measat will produce 1,000 hours of its own variety, talk, and game shows this year. And Astro has bought more than 1,300 hours of Chinese programming and 500 hours of Malay programming from local producers.

The need for funds for all these efforts is severe. Binariang, the Usaha Tegas company that runs the satellites and phone services, has already spent $700 million on infrastructure and must spend an additional $645 million over the next two years. Both Binariang and Measat plan to sell stock this year, hoping to raise $500 million each.

Not all of Krishnan's ventures have gone well. In 1994, Krishnan sold 20% of Binariang to U S West for an estimated $237 million, yet there's been no rich payoff. "We do have to do some refining of the operations," says Chuck Lillis, CEO of U S West Media Group. Chan Chee Beng, head of corporate finance at Usaha Tegas, says the fixed-line network has only 7,000 subscribers.

Sometimes, when the pace gets too frenetic, Krishnan wonders if he's placing the right bets. "It may well be, two years from now, we'll find it was a critical mistake to have thought we could build all this out," he muses. But then he shakes off the doubts and comes up with even more ideas. Next on his list: pay-per-view movies, Internet services, maybe even a children's channel. If there's one thing this visionary knows, it's how to keep plugging.By Bruce Einhorn in Kuala Lumpur, with bureau reportsReturn to top


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