It is a symbolic move...It takes a long time to get coverage on individual cable systems, and it takes a long time to turn that into advertising dollars

Andrew Collier, Bear Stearns

He has tried to repair relations with the authorities after a statement eight years ago in which he said satellite TV represents "an unambiguous threat to totalitarian regimes".

The talks are thought to be far advanced and likely to lead to the launch of a general entertainment channel by News Corporation.

"We are hopeful we can reach a positive conclusion soon and launch a new service that complements our already substantial operations in China," James Murdoch, chairman and chief executive of Hong-Kong based Star said.

Under the current complicated rules, both companies already have a presence in the market.

Some observers say that the fact that some foreign television distributors have already made inroads into the Chinese market may have encouraged the authorities there to change their approach.

"Instead of trying to block all of this stuff, they will regulate and approve a certain amount of it," the Financial Times' Beijing correspondent James Kynge told the BBC's World Business Report.

'Symbolic move'

The deal is potentially highly lucrative, given that the Chinese television advertising market is estimated to be worth about $2.4bn (�1.6bn).

Already China has 90 million cable subscribers.

But analysts warn that it may be years before the two companies can reap profits from China.

Some analysts are also sceptical about the value of current negotiations, given that Guangdong represents only one part of the potential market.

Ultimately, Andrew Collier, media analyst with Bear Stearns in Hong Kong, said: "It is a symbolic move...It takes a long time to get coverage on individual cable systems, and it takes a long time to turn that into advertising dollars."