Under the agreement, TOM will issue approximately 21 million new TOM shares, priced at 2.535 HK dollars each and acquire approximately 64 percent equity interest in CETV to become the majority shareholder. AOL Time Warner's Turner Broadcasting will hold the remaining 36 percent stake in CETV. Upon completion of the transaction, TOM will assume the management rights of CETV.

CETV was the first foreign TV channel to be granted cable television landing rights in China through a reciprocal carriage agreement with China Central Television (CCTV) in October 2001.

The agreement authorized CETV to be distributed via cable systems in south China's Guangdong Province, and allowed English channel CCTV-9 to be carried on selected Time Warner Cable Systems in the United States.

In 2003, CETV also expanded its cable distribution from Guangdong Provincial Cable Network to include Guangzhou Cable and Shenzhen Cable Networks, bringing its total cable distribution to 2.2 million households. In April 2003, CETV further extended its reach nationwide when it gained approval to broadcast via China's central satellite platform.

The TOM Group, founded in October 1999 as a joint venture between Hutchison Whampoa, Cheung Kong Holdings, and other strategic investors, is a Chinese-language media company.

China is one of the world's largest TV markets. It enjoys an estimated penetration of 94 percent, or over 300 million households, of which approximately 100 million households have access to cable or satellite TV. TV also captures the largest portion of advertising spending in China, accounting for over 40 percent of the total market in 2002.

(People's Daily July 3, 2003)