Due to frustrations over regulatory hurdles, canny moves by local players and a shift away from risky emerging markets, 21st Century Fox has during the past 18 months quietly sold off its interests in Phoenix Satellite TV, Star China TV and, just this summer, film and talent management company Bona Film Group.
The exits fit into Fox's strategy of either owning assets outright or selling them to streamline its holdings. "Fox has been simplifying its structure for years by shedding nonconsolidated assets," says Gabelli & Co. analyst Brett Harriss.
But Wall Street observers note that Murdoch is not throwing in the towel in China, where the market is growing by 30 percent a year. Fox is focusing instead on bringing its tentpole films to the world's second-largest movie market and circumventing its foreign-film quota with co-productions, including five with Bona. Up first is a remake of the Kate Hudson-Anne Hathaway comedy Bride Wars, scheduled for a late 2014 or early 2015 release.
Fox's asset sales in China "may just reflect a means to reposition investments in the market," says Janney Montgomery Scott analyst Tony Wible, who adds that with regulators limiting foreign companies' ability to maneuver and reach the whole country, running TV networks in China isn't as lucrative as it is for entertainment conglomerates elsewhere. Analysts have highlighted the fact that Fox has spent more money on growing its Star India business, which operates 33 channels in eight languages and has been a key growth driver for the company in Asia.
Some on Wall Street also see Fox's sales of its stakes in China as a sign that Chinese companies are becoming more confident in their ability to run media and entertainment operations on their own. Bona founder and CEO Yu Dong bought back Fox's 19.9 percent stake in his firm, and majority owner China Media Capital and the company's management team have acquired Fox's stake in Star China TV.
And Bona could well remain a Fox partner. Bona COO Jeffrey Chan said on an earnings conference call in late August that co-productions are not predicated on Fox being a shareholder: "I am hopeful and confident that we are going to have more cooperation with Fox in the very, very near future."