Chinese Ring-Tone Provider Hurray,
Independent TV Producer to Merge

BEIJING - Cellphone ring-tone provider Hurray Holding Co. and China's largest independent television-show producer Enlight Media Ltd. have agreed to combine their operations in a deal valued at about $160 million, according to people familiar with the matter. A deal could be announced as early as Monday afternoon.

Under the terms of the pact, Hurray, which is traded on the Nasdaq market, would change its name to Hurray Enlight Media Group Ltd. After the transaction, the company would be 42%-owned by the current owners of Enlight, whose chief executive would run the combined company.

The deal, which would wed Enlight's content business with Hurray's distribution channels as well as music labels it owns to create China's largest independent media content company, underscores the increasing pressure for Chinese service providers such as Hurray to rethink their strategies as the country's leading carrier, China Mobile Ltd., pushes into the wireless internet sector.

Providing mobile value-added services such as ring tones is considered by many to be a rapidly diminishing business in China. While Hurray and other companies like it were once considered to have great promise, most have reported declines or losses in the past year and are attempting to change their business strategies by moving into the content business.

China currently has over 500 million mobile phone subscribers, with the lion's share of subscribers being China Mobile customers. The carrier sporadically creates new regulations that industry insiders say severely impact service providers, like changing payment structures for data downloads and promoting its own wireless Web portal, Monternet, by warning users that they would be charged for data use outside of it.

"When they [Chinese service providers] went public, people were very hopeful because we'd seen a lot of successful service provider stories in Japan," says Fan Bao, CEO of China Renaissance Partners, the Beijing-based investment bank that advised both companies on the deal. But China Mobile is "increasingly looking to vertically-integrate [its] own value chain. That eliminates the growth for service providers; that was a disappointment."

Write to Loretta Chao at loretta.chao@wsj.com