Rupert Murdoch’s Star TV has pulled out of the battle for one of Hong Kong’s five new pay-TV licenses, put up for grabs in July by the Chinese government.

Star’s withdrawal leaves the field clear for Hong Kong's main free-to-air operator Television Broadcasts and Pacific Digital Media, a consortium whose investors include French media groups Lagardere and Thomson Multimedia. The licenses were formally awarded yesterday.

Local analysts believe that Star’s sudden loss of enthusiasm reflects the overcrowded nature of the comparatively small Hong Kong market (600,000 pay-TV subscribers) which is dominated by of its largest operator, I-Cable.

Opined Anne Ling, an analyst with HSBC Securities: "Earlier this year, everyone was talking about opportunities in interactive TV and e-commerce. Now companies are looking closely at the business model."

News source: Financial Times