MTV Joins With PolyGram to Launch Asia Music Channels : Television: Alliance to launch Mandarin- and English-language broadcasts is network’s first such deal with a record firm.

PolyGram will jointly fund and operate two MTV Asia channels being launched in the next month, the first time MTV Networks has made an alliance with a record company in one of its music channels.

Announced Wednesday by both companies, the partnership comes after a number of rival international music video services have been started by other major record companies, including PolyGram.

MTV’s parent company, Viacom Inc., has vigorously opposed rival music services set up by record companies and has threatened to start its own record label. Record companies produce music videos and license them to be aired by television programmers.

The agreement announced Wednesday suggests that taking on record companies as partners may be the best option for MTV.

“Our issue with the record companies has nothing to do with them getting into the televised music video business, it has to do with them getting into the business collectively,” said MTV Chairman and Chief Executive Tom Freston in a phone interview from Taipei on Wednesday. “Our concern is that such (collective) arrangements could present the potential for unfair business practices to evolve regarding the restriction of product supply.”

PolyGram, which is the largest record company in Asia with local artists such as Jacky Cheung, sees the MTV Asia deal as a regional deal which will support its local repertoire.

“Our view is to see these alliances on a regional basis--there is no grand plan of worldwide alliance with MTV,” Alain Levy, president and CEO of PolyGram, said Wednesday.

PolyGram and MTV will jointly own the 24-hour Mandarin-language channel MTV Mandarin launching April 21 and the English-language MTV channel MTV Asia launching May 5. Financial details were not disclosed but start-up costs are expected to be in the tens of millions of dollars to lease two satellite spaces and establish a local staff.

MTV has been off the air in Asia for the past year after a deal with Rupert Murdoch’s satellite service Star TV to carry MTV foundered in May, 1994. Since then, Star TV has launched an in-house music service channel with Bertelsmann Music Group, EMI Music, Sony Pictures Entertainment and Warner Music Group as equity partners.

MTV is also facing other competition in international services including a local German service called Viva which has EMI, Sony Pictures, Warner Germany and PolyGram as equity partners.

“One might say they got the jump on us in terms of total homes, but it’s still very early in the game,” MTV’s Freston said. “Right now, they cover anywhere between 30 million to 50 million homes. But analysts expect the marketplace in Asia to explode to 230 million by the year 2002. In fact, the game has barely even begun to be played. By the time the dust settles, MTV will be standing strong and tall.”

PolyGram has also been discussing setting up a U.S. music video channel with Ticketmaster, Warner Music, Sony and EMI and the deal in Asia will not affect that plan, according to Levy. That arrangement, however, was put on hold last year after questions were raised about possible federal antitrust violations.

Levy said PolyGram’s 20 years of experience in Asia and contacts in China made the company a logical partner for MTV Asia.

“MTV Asia will give our artists additional exposure, especially our Asian artists as the local repertoire accounts for 70% of the music sold in Asia” he said from Morocco, where he is on vacation.

“From a business standpoint, we feel there is tremendous growth for targeted regional broadcasters, and if we can leverage our artistic assets to enter this market, we will.”

PolyGram, a Netherlands-based entertainment conglomerate, has diverse interests in classical and pop record labels and in filmed entertainment, including the recently purchased ITC Entertainment catalogue. Viva and MTV Asia, however, are its only broadcasting investments.

“PolyGram is clearly a major player in Asia,” Freston said. “The fact is they’ve got a long history in this area and have their finger on the pulse as to what’s going on in Asian popular culture. PolyGram not only puts a lot of financial muscle behind the service, they have excellent contacts and great management. We see them as an excellent partner to help us grow our Asian business very quickly.”