China wants to open its media industry and create national giants

5 October 2009 0 h 16 min 38 comments

IPO, partnerships, mergers … China wants to create national media giants which could compete with the international, especially american groups such as News Corp, Time Warner and Universal, The New York Times.

According to some reports on Monday, Beijing government has set new media guidelines to help the financial development of domestic news and entertainment companies. Under these guidelines published last week by China’s State Council, China’s Communist Party leadership “will loosen some of its tight control of these industries,” The Times said.

The  China Communist party cabinet’s publicity arm, the State Council Information Office, released the guidelines that said state-owned media groups would be “reorganized to allow outside financing so that they could live on their own rather than being attached to government departments as parasites,” The Times said. In early September, Wang Taihua, deputy minister of the State Administration of Radio Film and Television, gave a rare interview to flagship state-run broadcaster China Central Television, in which he revealed government plans for new finance, banking, taxation to support media development.

No Chinese media published reports of the new guidelines and the guidelines themselves were not immediately available on the Internet. China currently is observing a week-long national holiday and government offices were closed. Further details could emerge later this week in Beijing at the first Global Media Summit. The three-day event, hosted by the state-run Xinhua News Agency, is expected to attract foreign media executives such as News Corp’s Rupert Murdoch and the heads of the British Broadcasting Corp. and Google.

The Times said the new guidelines could allow private and foreign companies to invest in everything from music, film and television to theater, dance and opera productions, although largely through state-owned companies. “The publishing of news would remain under the strict control of the state and the Communist Party”, the Times said.

A clarification for the emerging domestic media group

The guidelines are surfacing some days after the proposed merger of and Focus Media, a deal that might have created China’s second-largest media group, was stopped by the Chinese government and administration. Beijing didnt want to promote the creation of a media and advertising giant which would be based in China but almost completly controled by private shareholders through the NY and HK stock exchanges.

Other Chinese media groups could be the beneficiary of the new guidelines.

Shanghai Media Group, the second largest state-run news and media conglomerate after China Central Television, is reorganizing in preparation for a public stock issue. Its project includes the splitting into a state-run, non-profit that will control news programming and satellite transmission, and into a profit-driven unit that will control advertising and the production and distribution of entertainment content. SMG recently got a promise of $1.5 billion in financing over the next five years from The China Development Bank and the green light to create a $735 million private equity China Media Capital fund, to be run by SMG chairman Li Ruigang. SMG has already partnered with NBC, News Corp. and Viacom. 
. the two new film companies, Polybona and Huayi Brothers Media Corp, which are expected to raise hundreds million on China’s or Americas financial markets by year’s end

News of the guidelines comes on the heels of a recent win for the United States at the World Trade Organization, which said China was in violation of open market rules in the media sector. China is about to appeal the ruling.

SOURCES: Xinhua, Global Times (5/10/2009)

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