AOL Time Warner has sold a controlling stake in Chinese Entertainment Television (CETV) to Hong Kong's, less than two years after the channel was granted broadcast rights in mainland China.

Diversified media company, owned by Hong Kong tycoon Li Ka-Shing, is paying US$6.8m for a 64% stake in CETV. It will also invest up to US$30m over 30 months to finance the broadcaster's operations.

AOL Time Warner retains a 36% stake in the channel. It also has an option to buy back's stake from 2007 either at market value or's original investment cost plus a 50% internal rate of return, whichever is higher.

AOL Time Warner's pullback from the mainland TV market comes at a time when its motion picture subsidiary, Warner Bros, is stepping up activity in China (Screen Daily, June 24).

The media giant had high hopes for CETV when it was granted landing rights in Guangdong province in 2001. However, the channel reported heavy losses last year and has reportedly captured less than 2% of the market.