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Hong Kong's Mr. TV said he knew all the right people in China. So why did he pick the wrong partners and put his beloved channel on the line?

By Susan Berfield

THIS IS A STORY about connections and expectations. It is about conceit and deceit, about someone who was sold on musty ideas and fell for sweet-talking investors. This is the story of Robert Chua, a Singapore-born, Australia-educated and Hong Kong-bred TV producer of considerable talent, some means and no small amount of success and notoriety. At 21 he created Hong Kong's longest-running variety show; he introduced beauty pageants, charity telethons and adult chat lines. Three decades on he was still saying he knew what people wanted.

He believed in all things Chinese, particularly guanxi (connections), and most of all himself. Chua thought he knew how to do business in China and especially in the world of television, where the rules are murky. Since 1995, he had been beaming his satellite channel, China Entertainment Television, to the mainland. But he had no way of proving to advertisers how many were tuning in. To verify the audience size and make real money, Chua needed "official" permission to send programs along Chinese cable. He thought his "no-news-no-sex-no-violence" channel would please the powers that be. He said he was doing everything right -- he even broadcast China's National Day celebration, unedited and uninterrupted. Out of respect.

But Chua's connections failed him, twice. First in Guangdong province, home to China's most prestigious cable networks. Last summer, Guangdong authorities allowed News Corp. chief Rupert Murdoch (and partners) to sign deals with local cable operators. Chua got nothing. If he wanted similar access, he needed his own mainland partners. In October, he agreed to sell most of CETV to Beijing investors who seemed to have a feel for television, deep pockets and good connections. But they wavered, delayed, equivocated, call it what you will. They never invested a dollar. Again, Chua showed that he was not plugged in. By December, the deal was dead. And his channel was barely alive. Chua lost face, a lot of money, and some of his faith in guanxi. It could have happened to anybody, but Robert Chua never thought he was just anybody.

We begin near the presumed end, in early February. Robert, 51, and his wife (and business partner) Peggy, 49, are at home, in a fashionable, genteel neighborhood minutes from some of the busiest streets in Hong Kong. They are sitting at the dinner table, she in a red-and-white polka dot jacket and comfortable slacks, he in a dark suit and trademark black-rim glasses, circa 1964. There is no TV in sight, though they say they have a split-screen set in their bedroom that is always tuned to CNN and their own Mandarin-language channel. Thousands of Chinese antique vases, horses, soldiers, tea cups and more are lined up on every shelf and table, stored in every closet. The walls are white and bare, except for a poster of Mao Zedong, which Robert bought in a Beijing bookshop in 1978.

Three years after launching CETV and some $40 million later (including at least $8 million of their own), the Chuas are sinking. Having terminated credit lines, they now have less cash than they need. They cut half their staff, then halved the salaries of the 90 who remained. They arranged to delay paying APSTAR, the satellite company that beams down their channel. The programming, two-thirds of it acquired, is already low-cost. There is nothing more to pare.

But during a seven-course Chinese meal that begins with cold tofu and ends with cheese cake prepared by a worried friend, the Chuas are more hopeful than beaten, more charming than bitter. Viewers in China are upset about CETV's demise, and that is no small source of comfort. Since the couple announced in December that the station was in peril, they have received some $12,000 (which will go to charity), much of it in crumpled yuan but some in wire transfers. For more than 40 nights viewers called (and not collect, either) to advise, reprimand and commiserate with the Chuas during a phone-in program. There were letters too: hundreds postmarked from around China. Robert gave me copies of all of them. "We have not failed," he says, "except in dealing with those investors."

The man who was to head the group of investors came recommended, of course. Chua now calls Kan Shu-tsang, chairman of something called the China-Asia TV Arts Center, a dreamer. But in October Kan was a dream come true. As Chua says: "Kan seemed like the ideal partner. He was building a TV studio in Beijing. I was very impressed. I saw half of it. He has his own office building. And three hotels and restaurants. He showed us a very impressive book about himself. He claimed to have very good contacts at China Central Television (CCTV), and the president was going to be on our board. Kan lives in No. 6 Daiyutai, a very prestigious place that used to be occupied by Mao's wife. He wined and dined us there. We met all the right people. Why should I have looked for other partners?"

On Oct. 1, (National Day), Kan brought the other four investors to meet the Chuas. The timing seemed auspicious. Three days later, they signed a memorandum of understanding to buy 80% of CETV for $34.3 million and a promise of $40 million more to upgrade production. Three weeks later they signed a contract in Beijing. The consortium was required to put up only $11.8 million; it would pay the other $22 million or so over five years. Kan even managed to persuade Chua to relinquish the chairman's job to Sun Ji-hui, general manager of property developer, Beijing Mega Fortune Investment.

Chua always operated on instinct. The negotiations with the consortium were very Chinese, he says. Very foreign, says Chua's Canadian chief operating officer, Gerry Tymon. "Chua told me he'd lose face if he insinuated he didn't trust them," says Tymon. "The contract was 30 pages shorter than I would have written it. Every time there was a normal procedure to be done, Chua would say, 'It's not necessary, don't worry.' It drove me nuts. It drove the lawyers nuts. From day one there was a lack of compliance, but we didn't mention it because we were all supposed to be men of goodwill."

When Chua first announced the deal in Hong Kong, he did not neglect to mention that Yang Weiguang, vice minister with China's Ministry of Film, Television and Radio, head of CCTV and chairman of Chinese Television Artists Association (one of the investors) would be on the 11-member board of directors. A few days later Kan told the Chuas to identify Yang only as chairman of the television association. Chua wasn't sure why.

But he didn't begin to worry until mid-November. That was when Kan told him Yang was "not happy" about the original press release and might pull out of the deal. Then he called to say they were still in. Then that they might really be out. Chua flew to Beijing to talk to Kan face-to-face. Kan said he was sick and couldn't meet. Eventually, Chua says, he wrote Kan a letter stating the deal was off. That would have allowed Chua to look for new partners. Kan promised to sign it and explain why he ended the partnership, but he never did.

When Chua went to the Hong Kong media, Kan asked him to quiet down; it was embarrassing. When Chua vowed to sue the consortium for breach of contract, Kan said that wasn't very Chinese. "I am not afraid to lose face," says Chua. "I have already lost much more face than them, and here in my hometown." But Chua also wants to know "what people think of me after this?" The truth is that many people -- even those who would never watch CETV, disagree with his self-censorship or believe they see through his patriotism -- think it's a shame.

Of the many ironies in this story there is this. When Chua launched CETV, he offered advice to Western broadcasters seeking to operate in China: "Most companies are sold on anyone who claims to be a China expert. They think they have a successful deal when they actually do not. They must check whether those people are respected in China." It is not as if Chua didn't know the traps. He assumed he would see them.

"Kan was a lovely man," says Peggy Chua, "but he hardly spoke a word of truth." This much seems to be fact: Kan looks older than 43, dyes his hair black, never turns off his cell phone and travels with a small entourage. He served in the army for 20 years. He founded his arts center in 1988, works from an office on the building's 22nd floor and lives in a hotel he owns. Last year he recorded award-winning songs about Hong Kong's return to China. On the phone he sang a line: "One hundred years ago I watched helplessly as you went away. One hundred years later I await your return." Believe what you will of this: Kan employs 6,000 people, has created more than a thousand TV dramas, was named one of the 10 best producers in China, is on the list of 500 excellent entrepreneurs. And may, later, explain why he backed out.

Success came early to Robert Chua, and possibly spoiled him. After learning his craft in Australia, a 19-year-old Chua returned to Singapore, briefly. He couldn't get far without a degree, so he moved to Hong Kong, and joined start-up station Television Broadcasts (TVB) for $210 a month. His program, "Enjoy Yourself Tonight," went on air the second night of broadcasting. That was November 1967. It ran for 27 years. Its improbable host, Lydia Shum, a chubby Shanghainese woman who wore hornrims and joked about her weight, became a star, aka Fay Fay.

Chua left TVB, with Peggy, who had started out as his assistant and ended up as his second wife, to open his own production company in 1974. He made low-cost commercials (as many as a thousand a year), devised special advertising programs, produced corporate videos, started buying video rights for Mandarin movies, got rich.

Five years later, Chua became the first foreigner to peddle TV ads in China. He promised to sell HK$1 million worth ($130,000 at current exchange rates) and, to persuade the authorities to trust him, deposited that amount in a Guangdong bank account. He says he sold his house to come up with the money (Peggy had property too). In the end, he did manage to solicit nearly a million Hong Kong dollars worth of advertising. Later he produced educational programs, including English instruction, for Chinese TV. He claims he was among the first to resume business as usual after the 1989 Tiananmen crackdown.

It was 1994. Robert Chua was patriotic, apolitical and a professional. Nearly 200 million families in China owned televisions. It was time to think big. Chua's concept for CETV was designed to be government-friendly. But there are plenty of such channels in China, run by the government, and operating with big budgets. CETV was always a hard sell, and Chua never came close to raising the $100 million he needed. But he never rethought the concept. "Robert will listen to suggestions," says Tom Hartje, a management consultant and friend who advised Chua in CETV's early days. "But in the end he marches to his own tune, even when he may be out of step with the times."

Chua's flagship show is a remake of "Enjoy Yourself Tonight" called "Happy Times." It still stars Fay Fay. One-third of CETV's programming is produced in Hong Kong, the rest acquired. CETV does air some quality shows. But Peggy, who is in charge of acquisitions, must also buy second-hand programs from second-rate producers. Chua reckons "the audience doesn't notice, doesn't care." Besides, he says, viewers prefer clean entertainment, even if it's dowdy. To those who say his sharp, downmarket instincts failed him, Chua replies: "I'm sorry. They are all wrong." Just read the letters.

But the size of CETV's audience was always in doubt. Chua claims some 33 million viewers in China and throughout Asia, but he has never persuaded advertisers that CETV gets all those eyeballs. And what viewers Chua can claim seem to be mostly in towns where there are few choices and no money. Letters from viewers are no replacement for reliable research figures. And CETV has little appeal in sophisticated markets like Taiwan, where other foreign broadcasters earn money while waiting for Beijing to ease restrictions. Consultants were in and out of Chua's office. A former CETV executive says "a lot of people were explaining things to Chua, but he didn't want to believe them." Instead, he wrote personal letters to would-be sponsors and blamed the sales staff for not having the right connections. Many quit.

Still, Chua believed that if he waited patiently and quietly he would be the first broadcaster granted official access to local cable systems, prove to advertisers how many viewers were tuning in, and break even within a year. Then guess who showed up: Rupert Murdoch. Having angered Beijing in 1993 with his famous assertion that satellite TV posed "an unambiguous threat" to totalitarian regimes, Murdoch was back in favor. He launched a Hong Kong-based, Mandarin-language satellite channel, Phoenix, in March 1996 with two partners who had clear and not-so-clear links to Beijing: a media company best known for publishing an eight-volume pictorial history of China and a sales-and-advertising agency for China TV stations. By July 1997, Murdoch was making the rounds at the handover as a guest of Hong Kong's new chief executive, Tung Chee-hwa.

Soon after, Chua learned Phoenix had been granted "official" access in Guangdong. Clearly, says Chua, Murdoch's guanxi are "more powerful" than his. Phoenix was soon claiming 2.8 million viewers in the province, and some 36 million throughout China. In November, Phoenix held a sales presentation for 400 at Beijing's Great Hall of the People. The guests included representatives from mainland firms and multinational brands such as BMW, Citibank and Diet Coke.

With no money and no prospects, CETV was supposed to go dark at the end of February. But at 2:30 am on that last Saturday, Chua says he reached a deal with a group of overseas Chinese investors to keep the channel on air through March. Chua says they are negotiating to buy part of CETV and talking about adding news programs. "We had discussions in good faith," says Chua. "I am confident for now. I can't mistrust everybody." Robert Chua always believes what he wants to.

-- With reporting by Paul Mooney/Beijing

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