Consummating a deal that had been brewing on the back burner since 1997, Time Warner (www.tw.com) has signed a deal to occupy 12 floors of high-rise space in Oxford House in Hong Kong, where it will establish its new Asian headquarters. The mid-September deal for up to 133,000 sq. ft. of office space is reportedly 1999's largest single lease agreement in Hong Kong to date.

A convergence of media is what the world is moving toward, analysts continually remind us. And that's certainly the case with Time Warner's Hong Kong move, which will create a veritable crazy quilt of media inside Oxford House. The 12 floors the company will occupy will house CNN, Time Inc. Asia, Warner Bros. Far East Theatrical, Time Life, Turner Broadcasting System International, Asiaweek, the Cartoon Network, TNT, and Turner Entertainment Networks Asia, plus Time Warner Corporate and Warner Bros. Consumer Products.

Greater Operational Efficiencies, Plus a New Studio for CNN

Bringing together that media glut underscores Time Warner's commitment to the Asian market and will boost the company's operational efficiencies in the region, says Vice President of Real Estate Philip Pitruzzello.

"The consolidation of offices at Oxford House is a reflection of Time Warner's commitment to Asia and the importance of the region as a source of growth for our company," Pitruzzello explains. "Bringing together most of our offices under one roof will enable us to enhance our ability to serve our customers in many lines of business and to continue to build our presence as the center of our Asia operation."

Landing Time Warner's massive Asian operations center is a major coup for Hong Kong. 1999 has seen the Chinese "special administrative region" (SAR) losing some new investment in the region to Singapore, which was less hard hit by the Asian economic contagion. Bagging Time Warner, though, reaffirms Hong Kong's primacy as the hub of Asia regional headquarters. (Hong Kong's stiffest competition for regional HQs may actually be emerging in another Chinese city, the mainland's Shanghai.)

Total investment figures for the deal had not been released at press time. But the price was right for the space in the pricey Hong Kong market, according to John Falkiner, executive director of the Greater China operations of Los Angeles-based CB Richard Ellis (www.cbrichardellis.com), which acted as an advisor to Time Warner in the transaction.

"We accomplished our goal," Falkiner asserts, "which was to secure attractive financial terms and to negotiate technical upgrades allowing CNN to construct a state-of-the-art broadcasting studio on the 40th floor of the building."

A Move to Muzzle Hong Kong's Media?

Since 1997, of course, Hong Kong-watching has been an ongoing obsession for many geopolitical observers. That scrutiny has particularly focused on the interaction between the economically freewheeling SAR and the far more conservative mainland government, which became Hong Kong's overseer following the SAR's 1997 reversion to the Chinese.

Undoubtedly, Time Warner looked long and hard at Hong Kong's business climate before making its major real estate commitment. Nonetheless, the media giant's huge Hong Kong consolidation coincides with efforts within the SAR to put the brakes on what some governmental officials consider media excesses.

Some of those excesses will be familiar to Westerners who've been exposed to the likes of The National Enquirer and London's Fleet Street scandal sheets. For example, the Apple Daily recently conducted a salacious interview with a prominent socialite -- who happened to be dead, by the way -- using (what else?) a psychic as the interview's intermediary.

Hong Kong, on the other hand, is also home to some of Asia's most solid, well-respected journalism, much of it having a broad reformist bent. One local report, for example, revealed that the wife of inland revenue chief Wong Ho-Sang also just happened to run a tax consultancy. The story ultimately resulted in Wong's firing. (A cautionary note to mainland journalists reading this: Do not - repeat not - try this at home.)

With the SAR's prime development land a coveted commodity, real estate transactions have also been in the crosshairs of Hong Kong's media. One recent report, for example, criticized the rapid, allegedly rubberstamp approval that Richard Li, son of Hong Kong business tycoon Li Ka-shing, received in his bid to build a Cyberport.

Such full-frontal attacks on governmental favoritism are one reason some officials are now pushing for a "press council" to regulate Hong Kong-based media outlets. Hong Kong's Law Reform Commission recently recommended that a government-appointed body should be created and given the power to initiate investigations, imposing fines on "guilty" publishers of up to $130,000.

Interestingly, a majority of Hong Kongers supports the idea of creating a 20-member panel, half drawn from within the news industry. In a recent Hong Kong Policy Research Institute survey, 53 percent of respondents backed the press-council proposal.

At the same time, Hong Kong's media scene reflects the old adage of "the people get what the people deserve." The three Hong Kong dailies with the highest circulation - Apple Daily, Oriental Daily and The Sun -- have consistently been leaders in Enquirer-style jaundiced journalism.

Arnold Zeitlin of the Freedom Forum Asian Center, however, has blasted the efforts to muzzle Hong Kong's media, calling it "the most severe challenge to the freedom of the press since China took sovereignty."

Tempest in a Hong Kong Teapot?

What appears to be brewing, though, will likely be a tempest in a teapot - something that Time Warner almost certainly had sussed out before it made its major Hong Kong real estate commitment.

Without a doubt, some Hong Kong government officials are miffed over local press activities.

At the same time, though, insiders say it's highly unlikely that Hong Kong Chief Executive Tung Chee-hwa will allow the creation of a press review panel that has actual punitive powers. Tung, they say, remains acutely sensitive to maintaining Hong Kong's image as a capitalistic stronghold. Far more disturbing from a freedom-of-the-press standpoint are recent moves by the mainland government to curb the independence of Radio Television Hong Kong, the government-funded broadcasting arm.

Hooray for Media-wood

But for all the attention focused on those media controversies, all signs indicate that post-handover Hong Kong remains very much a vibrant business center. (Or, as one Rolling Stone writer recently observed, "Hong Kong is very much like New York City, only with a bunch of polite, smart Chinese living there instead.")

In fact, the Hong Kong government has just approved two tourism-driven plans that have Hollywood written all over them: a Hollywood-style "Walk of Fame" saluting homegrown media stars like Jackie Chan; and a permanent gallery dedicated to kung fu hero Bruce Lee.